Industrial property values soared across the Gold Coast, Newcastle and Toowoomba, beating the capital city average of 23.6% during the 2021 financial year, according to Colliers.  

Gold Coast industrial capital values rose 26.4%, followed by a 25.5% increase in Newcastle and a 24.2% jump in Toowoomba.  

Regional industrial capital values grew to an average of 22.2% within the prime market during the period.  

Colliers found that capital city industrial investors were being drawn to growing regional markets and moving up the risk curve. 

Prime yields across east coast regional centres compressed to 5.4% by June 2022, while prime yields in capital cities still averaged around 4%. 

Favourable conditions such as yield compression and boosted capital values were supported by an average prime rent increase of 9.6% across east coast regional centres during the period, according to Luke Crawford, Director, Research at Colliers. 

“While most of the spotlight has been on the record performance of capital city industrial markets, many regional markets around the country have outperformed their respective capital cities, led by higher levels of population growth and shifting business preferences,” Crawford said.  

“Regional industrial markets are also well placed to weather interest rate headwinds and buffer rising fund costs, given the higher yield spread than capital city markets.” 

Elevated demand and low vacancy was expected to drive the growth of regional industrial markets, with available supply across the assessed markets dropping to around 110,000 sqm in June 2022 from around 260,000 sqm in June 2021. 

Colliers forecasts rental growth of 7.5%-10% over the next 12 months due to the limited new supply on the horizon, particularly for buildings of 3,000 sqm and above.  

Daniel Coburn, Director of Industrial, Colliers Gold Coast, said occupiers were being directed to the pre-lease market or were buying land themselves and building their own warehouse. 

“With strong underlying fundamentals, the momentum from 2021 has continued into 2022, supported by population growth, the continued growth of e-commerce and the movement of businesses from Brisbane,” Coburn said.  

Trent Robertson, National Director of Industrial, Colliers Newcastle, said Newcastle was seeing a race to execute leases for the first time, ensuring rents continued to climb. 

“Infrastructure investment and buoyant local economic conditions have continued to support industrial demand across the Newcastle and Hunter Region, however, a lack of stock for lease and sale is restricting enquires and mandates being met,” Robertson said.  

Dan Dwan, Managing Director, Colliers Toowoomba, said Toowoomba’s growing industrial market was also set to benefit from planned infrastructure, including the proposed 12,000 sqm assembly plant at the Wellcamp Airport by Boeing. 

“The Toowoomba industrial market has been a standout performer in the region in recent years and this is set to continue given recent investment,” Dwan said.