Occupier demand for industrial property across Brisbane picked up very strongly during the 2022 financial year. By our estimates, net absorption reached around 715,000 square metres during this period, which is around two-to-three times the long run average. Buoyed by Queensland’s relatively strong economic performance in recent times, businesses are making leasing decisions to enable them to service rising demand from their customers. Enquiry has been very strong across the South, South East, South West, North and the Trade Coast. Rising interest rates are pushing some would be owner occupiers into the tenant pool, as is the limited options for owner occupiers to purchase. Demand continues to come from a broad range of sectors as businesses invest in supply chains. However, the most active groups in the market looking for space during the 2022 financial year were transport and logistics, retailers (including e-commerce) and manufacturers. Many businesses are now holding more inventory to guard against supply chain disruptions and would like to take additional storage space if it were available. This is a common theme, not unique to Brisbane. The surge in net absorption during the 2022 financial year easily outpaced rising new completions, lowering the metropolitan vacancy rate to an estimated 1.6 per cent at June, the lowest vacancy since the tail end of the last resources boom 10-years ago. Vacancy rates are extremely low in the Trade Coast and North regions but are so low as to be constraining net absorption across the metropolitan area as a whole. Reflecting the rapid market tightening over the last 12-months, net stated prime rents rose strongly across the regions to sit between an average $110 per square metre at Yatala up to $140 per square metre on the Trade Coast at June 2022, all up by around 10 per cent per annum. Average prime incentives started to fall notably during the 2022 financial year, ranging from 12 per cent in the Trade Coast to 16 per cent in the South. Incentives on pre-lease deals can be higher, depending on the developer. Average secondary stated rents demonstrated solid to strong growth as well, rising by 6 per cent to 12 per cent across the regions. Leasing market 15 5/14 Freemantle Street, Burleigh Heads QLD 4420 Industrial Market Monitor | 2nd Half 2022
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