Market Review February 2024

2023 saw Brisbane Industrial property as the asset class of choice for commercial property. This is set to continue into 2024. The year saw unprecedented demand for sales and leasing, driven by low stock availability, limited land supply, 40-year high migration and supply chain constraints. This resulted in substantial increases in property values and rental rates.

How will sales and leasing perform in 2024?

Sales: Sales are expected to remain buoyant throughout 2024. There is still a major lack of stock available and demand from owner occupiers will continue. Many astute investors see industrial real estate as a secure investment vehicle, compared to a potential volatile share market, and low earning bank deposits. Whilst there are many macro and micro influences on the economy, most economists believe the RBA is finished with interest rate rises with the prediction the next move will be to lower interest rates. Potentially tightening yields that will benefit property values.

Leasing: In 2023 rental rates generally increased by 20 – 30%. In terms of property values, this countered the hikes in yields due to interest rate increases. Industrial vacancy rates rose for the first time in 5 years. The second half of 2023 saw an increase in vacancy rates from 0.7% – 1.4%. Keep in mind vacancy rates remain relatively low. We expect this trend to continue into 2024 with secondary stock being most affected. Leasing rates are expected to normalize, and rental incentives are set to become more prevalent for owners to protect their face rents.

Robert Finlay
Director Sales & Leasing

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