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Commercial industry insiders are tipping a robust period of rental growth in the second half of 2022 and into 2023 for Brisbane’s industrial and logistics market.
While still lagging behind the growth seen in the strong markets of Sydney and Melbourne markets, Brisbane is speeding up, with prime industrial rents increasing by 4.3 per cent in the year to March 2022. Melbourne, still building back from its significant economic downturn during COVID-19, bounced by 10.9 per cent during the quarter, while Sydney reported 9.6 per cent growth.
But low vacancy rates across Brisbane of just 3.1 per cent in Q1 of 2022 have created favourable conditions leading into the latter part of 2022, according to Colliers’ industrial director of research Luke Crawford.
“Looking ahead, we are forecasting rental growth in the order of 6 per cent over the next 12 months for the Brisbane market, with selected precincts such as the [the Australia TradeCoast region] and north expected to outperform given the lack of leasing options,” Mr Crawford said.
“New rental benchmarks will be set over the next 12 months,” he projected, “particularly for pre-commitments given the sharp rise in construction costs as developers look to offset this through higher rents”.
At present, pre-commitment rents across Brisbane average $115 per square metre; however, the group expects that these will creep closer to $130 per square metre by mid-2023. Western Sydney, by comparison, commonly leases space at $160 per square metre. As a result, Brisbane is apparently becoming increasingly attractive to occupiers who can be flexible in their location.
The Queensland capital has been particularly attractive to those previously based in the harbour city, as Sydney’s industrial market has tightened so severely that market experts are advising anyone looking to secure a space in the south-west that they should realistically be looking 12 to 36 months into the future.
“Brisbane is on the cusp of a period of strong economic expansion and the local industrial and logistics market will be front and centre of this,” Mr Crawford said.
“While the yield compression cycle has slowed, the pick-up in rents will reinforce investment decisions and drive further capital inflows into the Brisbane market.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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