Developers land-banking for the long-term in crucial region
The prime south west corridor in Brisbane is experiencing shortage of large-lot land supply, particularly for sites larger than 5ha and those with immediate access to the Logan, Ipswich and Gateway and M1 motorways, according to Colliers International.
The real estate firm describes a scenario where lack of supply leads to warehousing developers land-banking in strategic locations to avoid being left out in future.
“We are now heading into single digit opportunities of available large lot land sites to develop,” Colliers International national director of industrial Matthew Frazer-Ryan says.
“This is leading to the increase in land values and driving occupier requirements further south to Yatala or further west to Ipswich, which is helping grow and develop these districts.”
According to Colliers International research, Brisbane industrial land values for 2.5ha serviced land lots have increased on average 16 per cent over the last financial year, from $253 per square metre in 2015/16 to $294 sq m in 2016/17.
“Occupiers and developers in these precincts are now planning up to 10 years ahead and looking for sites to build on that are situated adjacent to existing transport nodes or future road network upgrades,” Frazer-Ryan adds.
“They are land banking to secure their future industrial footprint.
“Some of these occupiers that have less flexibility in choosing a location are also now starting to look at brownfield sites that provide short to medium term income, and that can become available for future redevelopment in lieu of the traditional land bank strategy.
“Limited stock of quality warehousing facilities has meant that on the leasing front we are experiencing a flight to quality with occupiers moving from older and less efficient facilities into modern A-grade facilities.
“Additionally, tenants are taking up space in the brand new spec developments providing easy access to major road networks and associated infrastructure.
“Considering existing A Grade facilities are tightly held in this precinct, the demand for design and construct product will increase, ensuring those developers that have landbanks leverage this benefit in the foreseeable future.”
Demand and take-up in the south and on Logan Motorway corridor has been more subdued for the year to date.
However ongoing negotiations for a series of new commitments are forecast to be completed in the coming quarter, and rebalance the take up across the southern market.
Overall, the industrial market in Brisbane has experienced significant leasing activity in the first half of this year, the agency reports.
This is particularly within the TradeCoast region, with Colliers’ research showing more than 100,000 sq m of leasing transactions for warehouses 5,000 sq m and above so far this year.
Colliers says its research shows prime grade net face rents in the Australia TradeCoast precinct increasing 3.11 per cent over the year-on-year to June.
Driving growth for industrial product in the Australia TradeCoast precinct is the significant investment in infrastructure projects underway including the duplication of the runway at Brisbane Airport and the upgrading of Kingsford Smith Drive which will help improve the productivity of the region.