More new industrial and logistics space has come online in Brisbane in the past six months than anywhere else in Australia.
CBRE’s National Vacancy Report on assets greater than 4000sq m showed the vacancy rate in Brisbane had risen slightly to 2.9 per cent following the addition of 277,901sq m of new supply to the market.
Brisbane-based CBRE research analyst Gus McConnell said occupiers had capitalised on the new space with a net absorption across Brisbane of 192,626sq metres, equal to about four Suncorp Stadiums.
“In Brisbane we saw a large influx of supply as developers reacted to favourable market conditions,” McConnell said.
“Although we expect the total supply brought to the market to fall slightly in 2021, this demonstrates the confidence from investors in the Brisbane industrial market.
“Nationally, increased occupier demand in sectors such as e-commerce, distribution and logistics, and data centres has driven that, in conjunction with a pause on speculative developments amid the uncertainty of Covid-19.
The national net absorption figure across Australia’s five major cities was 1,733,316 square metres.
Sydney had the lowest vacancy rate for industrial space at 1.4 per cent, followed by Melbourne at 1.55 per cent. The national average of 2.24 per cent is down from 2.95 per cent at the end of last year.
According to the CBRE Queensland state director for industrial and logistics Peter Turnbull, the new supply in Brisbane was in the western corridor.
“Leasing activity in Queensland has been stable across the first half of the year, with the majority of supply being taken up by e-commerce, and transport and logistics groups,” he said.
“After most of the speculative supply was put on hold early in the pandemic, we are starting to see these developments resurface, particularly through the western corridor.
“With this shortage of supply coming to the market, and increased occupier demand, we’ve seen in excess of 190,000sq m of net absorption in the Brisbane industrial market during the past six months.”
Turnbull said investor interest had also been strong across the industrial sector.
“Investment volumes in the first quarter of 2021 reached $216 million across nine transactions, up from $186 million a year earlier, as investors look for long-tenanted occupiers with an extended weighted average lease expiry (WALE),” he said.
“This highlights the continued depth of institutional investment demand within the Brisbane industrial market.”
CBRE regional director Cameron Grier said he had not seen this volumes of leasing enquiries nationally in his 20 years of experience.
“This has not been restricted to the major east coast markets either, with South Australia and Western Australia also experiencing record leasing demand,” he said.
“In 2020, e-commerce experienced five years of growth in just 12 months and now accounts for around 13 per cent of all retail sales in Australia.
“This, coupled with the fundamental rethink of how occupiers deal with inventory levels, has created considerable momentum in the industrial and logistics sector in 2021.
“From an occupier’s point of view, the expected tightening of vacancy across all markets means that they now need to start thinking about their moves much earlier to ensure the continuity of their supply chains.”