Tenants drawn to Brisbane's speculative sheds
Speculative developers of industrial properties in Brisbane’s south and south-west are being rewarded with strong tenant demand, while a tightening prime-grade market is driving demand for “riskier” assets among investors, Colliers International says.
According to Colliers’ Research and Forecast Report: First Half 2017, Brisbane’s south was the most active precinct for speculatively built investment leasing in the second half of 2016, with increasing inquiry in 2017.
Limited availability of stock, particularly in the southern section of the south precinct, along with limited land opportunities for large-scale facilities will place further pressure on yields for industrial property in coming years, it says.
The firm cites deals such as Ashai Beverages leasing an 18,788-square-metre facility in Heathwood and pre-committals from Avery Dennison, National Tiles, Franklyn Blinds and Super Amart as examples of strong activity.
Dennison pre-committed to 4986 square metres at Berrinba, National Tiles to 13,159 square metres at Berrinba, Franklyn Blinds to 8042 square metres at Rochedale and Super Amart to 50,240 square metres at Rochedale.
Colliers reports limited stock of A-grade quality warehouses in the south-west corridor for both tenants and owner occupiers, including existing and speculatively built stock.
In the south-west a Goodman speculative development at 62 Monash Road, Redbank, is now fully leased with Zenexus taking the final balance of 8990 square metres of the approximately 15,000-square-metre facility.
Zenexus joins DB Schenker, Northline and TNT in Goodman’s Redbank Motorway Estate.
Closer to the city in the 800-hectare Australia Trade Coast precinct, Goodman has delivered a 30,200-square-metre speculative development at 96-104 Export Street, Lytton, having already leased 10,000 square metres to MRC and Deliver Group.
Colliers cites the estate’s direct toll-free access to the Ipswich Motorway as the reason it is a popular choice for tenants operating in the transport and logistics sector.
According to Colliers, average Brisbane prime-grade yields are currently between 6.25 per cent and 7.25 per cent.
Secondary grade yields across the greater Brisbane industrial market as at March 2017 sat at 7.95 per cent to 8.6 per cent.
Secondary grade yields tightened 25 basis points over the six months to March 2017, benefiting from fierce competition for prime-grade assets.
