With 140,000 square-metres of speculative stock set to hit the market this year, developers are zeroing in on Brisbane’s strongly performing industrial and logistics market.
While ongoing competition is high for available stock, total speculative stock is double the five-year average in 2021. In tandem, leasing activity is also on the rise with circa 260,000sqm of active leasing briefs for Brisbane I&L space.
CBRE research associate director Tom Broderick noted that the industrial and logistics market had emerged as a clear winner when COVID-19 was causing a high degree of economic and commercial property market uncertainty in Queensland.
“E-commerce penetration has accelerated over the past 18 and is one of the key drivers of demand for floorspace,” he said.
“Investors have responded by seeking to increase their exposure to the sector, however, there has been a lack of investment stock coming to market to fulfil this demand.”
While development levels have risen, CBRE Queensland I&L state director Peter Turnbull noted that approximately 75 per cent of the speculative stock developed in Brisbane since 2013 had a lease commence within one year of practical completion.
CBRE’s I&L research report also highlights that Brisbane industrial land values have risen by approximately 3.5 per cent per annum over the past five years, driven by tight land supply.
“Developers and investors are desperately trying to increase their land holdings in the Brisbane industrial market. However, there is a lack of available land to purchase, with large institutional owners generally land banking – putting upward pressure on pricing,” he said.
The CBRE report also analyses the key market demand drivers of e-commerce and food manufacturing, with Mr Broderick noting Queensland’s larger regional towns had been key drivers of e-commerce growth to access products not available at shopping centres.
CBRE’s report also highlights food and beverage manufacturing as another focus area, particularly given the Australian Government’s $1.3 billion Modern Manufacturing Strategy identified it as a national priority when released in late 2020.
“Queensland has already seen a steady increase in manufactured food exports over the past decade, which has offset a decline in agricultural exports. This has benefitted the I&L market, driving demand for specialised manufacturing facilities and cold storage, which will continue to accelerate in line with the government’s national strategy,” Mr Broderick added.