QLD MARKET OVERVIEW
QUEENSLAND
Mark Clifford - Head of Industrial QLD - Knight Frank
Given historically low vacancy rates across Australia, what impact has this had on rents and industrial property values? We have seen significant rental increases in every state given the high levels of demand for industrial product by occupiers and the severe lack of stock available. (see graph). Sydney is still well out in front in terms of annual rent growth (up to 40%), with Brisbane and Perth not far behind. Melbourne and Adelaide have also seen strong growth. So right across the board over the last 12 months industrial rental growth has been evident.
MARK CLIFFORD
Values in general have remained stable, however yield softening has also occurred Nationally across both prime and secondary classes. A lack of transactional activity over the last quarter has also added to a bit of uncertainty in general as to where current values generally sit. There is no doubt that rent growth has assisted with landlord returns, and industrial still sits at the top of the tree with many investors as an asset class. The demand is still there for industrial in what is now considered a safe and strong investment category in Australia. What is the current and foreseeable appetite from both investors and owner occupiers for industrial property? Still very strong and will continue to be strong in the foreseeable future. Investors both private and institutional are still hungry for opportunities to grow their portfolios. The brief from many investors has changed, seeking to secure investments that are less passive, preferring short WALE and potential expansion and value add opportunities. Owner occupiers continue to remain active at all warehouse size levels. A lack of stock however has forced some of the owners into leasing their sites until the market shifts and potential sale stock is freed up. Is e-commerce still driving demand for new supply? Yes but not to the same extent that it was 12 months ago. Consumer demand continues to be strong, however it has dropped off from the peak. There is more of a mix of demand now from occupiers, including a resurgence in manufacturing groups and specialized occupiers including food production and processing. Where has off-shore capital been coming from for bigger industrial assets and portfolios? The biggest industrial portfolio transaction this year has involved Australian Super to fund the project from a relatively new user in the logistical space. Alternatively, Gateway capital have been active with Canadian pension fund money with several other institutions using capital from the US and Singapore highlighting the
80 – October / November 2023
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