THE PROPERTY DEVELOPMENT REVIEW
to their local capital cities, along with the continuation of strong migration to SE Qld and the lure of the Olympic Games. What market sectors do you anticipate being most in demand over the next six months? The industrial market, without a doubt. The industrial leasing market is at the lowest vacancy rate for decades causing unprecedented demand from tenants, and we see this continuing over the coming months. The under supply of space is causing many projects to be leased before being completed. There is also a lack of quality sale listings on the market and this is likely to continue. Many landlords who acquired assets before the sharp rise in rental rates are now achieving exceptional returns and are understandably reluctant to divest. Do you feel that associated factors like building costs, supply-chain challenges and market sentiment will improve for developers over the next 6-12 months? For instance, have building costs already peaked? Through associations with our developer clients, the feedback we hear is that building costs have peaked and costs are likely to decrease slowly as time goes on. Similarly, delays caused by supply-chain
issues are not as prevalent. Some of our clients who decided to hold on projects last year due to building costs have received revised quotes this year which are now at acceptable levels and as a result will start construction shortly. Even though there are still stories of builders going bust, I believe market sentiment has improved and will continue to improve for developers over the coming months. What advice do you have for any prospective developers in the current climate? For industrial developers, capitalize on this high tenant demand. If you are sitting on land, consider activating your project this year. The risk level to find a tenant or buyer is low. If the margins are too lean, consider doing a marketing campaign for a ‘design and construct’ deal as tenants are more open to a D&C deal now compared to previous years. Tenants are aware they now need to wait longer to find the right space, and they are open to paying a premium. How have your marketing strategies changed, if at all, over the past 12 months? Online portals and social media continue to be the main driver for enquiries. In this market, we find that clients’ marketing
budget can go further by using innovative online strategies, as opposed to the more expensive and traditional print media. With less stock in the market, we can make the property stand out from its competition more easily, resulting in a great number of qualified interested parties. The online marketing strategies tend to result in the best return on marketing investment for vendors and lessors.
April / May 2023 – 67
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