Market Update October 2014

by admin-king | 15th October 2014

There is activity across all sectors of the Brisbane industrial leasing market; but, the small to medium sized properties are where the action is. Over the last twelve months a steady stream of lease transactions has seen quality buildings leased at stronger rental rates.

Whilst there is reasonable leasing activity for larger buildings the focus is clearly on small to medium sized requirements. That makes sense given the slow improvements in the economy. Our research is telling us that the average industrial leasing requirement is in the vicinity of 700 to 1,000 m2. Given the fairly solid take up of these smaller properties available stock is declining, there is less emphasis on incentives and a strengthening of rental rates in that sector.

Our research is showing that leasing transactions for buildings under 1,000m2 are achieving average rates of around $120/m2 . Price expectations for medium sized buildings range from $85/m2 to $120/m2 depending upon quality and location. The current average rental rate for medium is around $105/m2. These averages indicate rental rates are trending upwards. Obviously ‘A’ grade buildings in top locations command a premium.

Recent King & Co transactions include 30 Huntington Place, Banyo where David Knox negotiated a three year lease for logistics company Gibson Freight in a modern 1270m2 freestanding building comprising 195m2 of quality office. On the south side another logistics company, Brisbane based MCR Specialised Logistics took a five year lease in a modern 2,375m2 office warehouse at 7 Murdoch Circuit, Acacia Ridge. The deal was negotiated by Daryl Sluggett at around $110/m2.

Whilst it is evident that business conditions are improving, prospective tenants frequently seek short term leases which we consider reflects continuing uncertainty. Interestingly, our market analysis indicates that the average term of new leases for small to medium requirements is around 2.4 years which suggests that negotiated lease terms are starting to increase. Intuitively, owners with modern quality buildings are more likely to achieve both longer term leases at higher rates.

Highly specialised and older redundant buildings such as former manufacturing properties and particularly the larger properties remain significantly harder to lease and that is where we are seeing much higher levels of vacancy.

Wayne J Robson 
General Manager
October 2014

Comments are closed.