City Fringe Industrial Sales and Leasing trends

South City Fringe including West End, South Brisbane, Woolloongabba, East Brisbane & Coorparoo.

South City Fringe Highlights Industrial sales activity in the South City Fringe precinct of West End/South Brisbane remained constrained by a lack of available stock and because only a limited number of listed properties were able to achieve asking price. This situation was made worse by too many vendors unwilling to meet the market, deals falling over due to a lack of financing or possibly  where land valuations can’t support the contract price. Moreover, some investment properties were suffering from their owner’s inability to achieve adequate rental rates. Examples of properties for sale include a 205m2 office/showroom at 1/5 Cameron Street, or a 428m2  freestanding office/warehouse at 8 Ferry Road. The next six months should also see little movement, for the same reasons.

The leasing market on the other hand enjoyed good takeup, particularly when a space featured a high office component, as prospective tenants with purely industrial needs tended to locate further out. Representative transactions include 478m2 of space at 1/14 Hockings Street, a 1,327m2 space at 8 Hockings Street, a 460m2 space at 384 Montague Road and a 370m2 unit at 1/23 Anthony Street, the latter having sat vacant for over a year until rented.

While some of this activity can be attributed to the suburb’s long standing attractiveness, demand has been given a significant boost from the Go Between Bridge, a piece of infrastructure that has gone a long way in easing isolation, access and traffic congestion problems historically suffered by tenants who chose to locate here.

The next six months will see little change in industrial rates, but from a commercial point of view there will be a slight increase in line with this precinct’s rising popularity. Of the few larger industrial properties left on the city fringe market, it’s important to include a 3,026m2 office/warehouse at 399 Montague Road. Presently occupied by the BCC, it features three street frontage, 2,064m2 of hardstand, great access and good internal height…which, together provides a feasible alternative for significantly sized businesses needing to be close to the CBD, for example couriers. Meanwhile, older factory stock is to remain obsolete, with owners breathlessly waiting for the day when their sites can be economically redeveloped or converted into office, albeit still happy to collect a holding income in the interim.

Sales deals in the Woolloongabba/East Brisbane/Coorparoo precinct have also been few and far between due to its tightly held nature and low prices acting as a disincentive to putting anything on the market. While there are a couple of developments ready to go, nothing can be built as long as banks remain reluctant to lend and there’s still a general absence of confidence in the broad economy.

Although Woolloongabba has little industrial leasing stock available, what does exist tends to be primarily of interest to the service trades such as plumbers. Examples include: 1,200m2 of well valued space at 96-98 Deshon Street, at $100/m2, and two 465m2 tenancies at 100 Norman Street can be rented for $150/m2. Meanwhile, there is some quality commercial spaces that should be looked at, most of it of good value, especially when compared to Milton’s and Newstead’s premium rates.

Like the last six months, there should continue to be a slow and steady takeup due to an ongoing lack of stock and moderate demand. When combined, this also means that there will be rate stability. That being said, it also must be presumed that when confidence returns to the market we will see potential rate increases mostly from the service trades sector due to its good access to the Gateway Bridge and major arterials, as well as enjoying fair rates. Transactions include a 500m2 space at 11 Castlemaine Street, at $90/m2, plus a 367m2 space at 11 Birubi Street, at $127/m2.

There’s also a good selection of property on the market like a 574m2 freestander at 26 Cambridge Street for $120/m2; a 474m2 space at 26 Harries Road, at $130/ m2, while $100/m2 will get you into premises between 458m2 and 1,800m2 at 67 Holdsworth Street. The next six months will see a lack of stock in the likes of Morningside, which should have the effect of encouraging more businesses to look at Coorparoo. Once there they are expected to find it represents comparatively good value and, as a result, should see good takeup.

North City Fringe including Albion, Fortitude Valley, Newstead & Bowen Hills

North City Fringe HighlightsThe North City Fringe, comprising Albion, Fortitude Valley, Newstead and Bowen Hills, is seeing astute investors looking for quality leased premises with higher than previous yields coming back to the market. Unfortunately, there is a lack of this type, hence the competition and quick take up.

Recent yields achieved in this part of the fringe have been between 8% and 10%, depending on quality of the building, land and location. There is minimal land left for development, leaving high rates as a result.

The leasing market remains tightly held, with minimal larger floor plates being available and no new developments near completion. Rates range from $250/ m2 to $350/m2, even as much as 400/m2, depending on the quality, location, parking arrangements and fit out.

Due to this shortage, and the limited supply to become available, fewer incentives and higher rentals are being achieved. This is also because of the limited options currently available in the CBD, where mining and resource firms have created near zero vacancy, forcing many to look to this precinct.

The opening of the M 7 AirportLink and upgrade of the Inner City Bypass has also improved the traffic flow and access to these suburbs, which has previously been a hindrance.

 

Milton

Milton HighlightsPresently, there are quite a few buildings for lease in Milton, generally of the commercial variety, as well as a couple of smaller office/warehouses throughout the Lang Parade area. Examples of the latter include a 410m2 space at 21 McDougall Street and a 271m2 unit at 20/43 Lang Parade. Commercial takeup here tends to be contingent on CBD overflow provided by mining and resource industry needs as well as the competing popularity of the West End/South Brisbane precinct, with its newly found ease of access offered by the Go Between Bridge.

Most sales transactions have been to owner/occupiers, at rates from $3,500/m2 to $4,500/m2, as investment deals have been minimal due to vendors not achieving the yields they need. No change is expected during the next six months.