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Brisbane Q1 industrial take-up breaches 10-year average
Demand reached a total of 151,000sqm during the quarter.
According to a JLL report, gross industrial take-up in Brisbane remained above the long-term average, despite a marginal decrease in demand from last quarter. A total of 151,000 sqm was recorded in Q1 2024, 11.5% above the 10-year historical average (135,300 sqm).
“A pre-lease in the Trade Coast to StarTrack signified the largest transaction of the quarter. The 31,000 sqm commitment represented circa 20% of total gross take-up in Q1 2024. Demand for Industrial space was highest in the Southern precinct and closely followed by the Trade Coast, whereas no leasing transactions above 3,000 sqm occurred in Brisbane’s Northern precinct,” the report said.
Here’s more from JLL:
The supply pipeline in Brisbane has been building in the past 12 months and completion of new stock is trending upwards. In Q1 2024, 165,500 sqm of new warehousing was completed, well above the 10-year historical average (84,300 sqm) and 39% higher than the previous quarter.
A total of 380,400 sqm is now under construction in Brisbane with a completion date anticipated for 2024. Half of these developments are in the Southern precinct and a further 40% in the Trade Coast.
Average prime and secondary rents increase further
Average net face rents in all industrial precincts in Brisbane increased in Q1 2024. The strongest prime rental growth was recorded in the Trade Coast (5.9% q-o-q) to reach AUD 179 per sqm per annum. Meanwhile, Southern and Northern precincts were both 3.8% higher in Q1 2024.
In Q1 2024, transaction volumes totalled AUD 267.3 million, both an increase compared to the previous quarter and also exceeding the 10-year historical average of AUD 258.4 million. The quarterly total included a portfolio sale with CapitaLand divesting two assets purchased by AsheMorgan. Both assets were located in the Southern precinct, in Parkinson and Larapinta.
Outlook: Supply and leasing dynamics to create balance in Brisbane
Occupier demand for industrial space is anticipated to continue into 2024. Activity from larger tenants with a national presence is ongoing in Brisbane, given the relative rent affordability in comparison to other Australian markets. The availability of prime industrial facilities is expected to remain low, with high demand from tenants seeking to prioritise sustainability.
The Reserve Bank of Australia has noted that inflation, while moderating, remains high in 2024. Given a potential reduction in interest rates towards the later part of 2024 or into 2025, this may stimulate investment activity from buyers.
Note: Brisbane Logistics & Industrial refers to Brisbane's industrial market (all grades).