Queensland’s Industrial Property Market Witnesses Remarkable Growth

The commercial property sector in Queensland has experienced a significant upsurge in 2022, as highlighted in Raine & Horne Commercial’s Q4 2022 edition of Commercial Insights. The report underscores the stellar performance of industrial property assets across the state, particularly in attracting cash buyers within the sub-$5 million price range.

While the prevailing interest rate environment is anticipated to lead to increased yields in office and retail properties over the next year, the industrial segment is expected to maintain stable yields due to robust demand coupled with limited supply. Notably, owner occupiers, especially those involved in distribution-related businesses, food packaging, and consumer goods, are the primary drivers of this demand.

The surge in demand for commercial properties in Queensland has resulted in industrial land prices more than doubling in some regions compared to just a few years ago. The pandemic has notably propelled industrial properties to the forefront of the commercial real estate market, with many experts noting a preference for cash transactions among investors in the sub-$5 million bracket, which has helped mitigate the impact of rising interest rates.

Looking ahead, the outlook for industrial markets in Brisbane North appears promising. While retail properties in this region are yielding around 4.5-5.5% on average, offices are generating 6-6.5% yields, and industrial assets are securing yields of 5-6%. Mr. Trent Bruce, Managing Director of Brisbane North, highlights the resilience of the market, underpinned by interstate migration and sustained consumer spending patterns.

In Brisbane Southside, the industrial market stands out as a top performer, with low supply and high demand expected to maintain industrial prices and yields. Mr. Joseph Grasso, Principal/Director of Commercial Brisbane Southside, notes that industrial and retail properties are currently yielding 5.5-6%, with office space reaching yields of 5.75-6.25%. Vacancy rates across different property types remain low, driven by strong consumer demand and low unemployment rates.

Furthermore, regional Queensland is also experiencing heightened interest in commercial properties, with limited availability of small to medium warehouses due to owner-occupiers capitalizing on favorable interest rates. This trend has led to a shift in prices per square meter, ranging from $130 to $180. The suburb of Garbutt emerges as a preferred location for small to medium businesses seeking proximity to both suburbs and the CBD.

In summary, the commercial property market in Queensland, particularly the industrial sector, is witnessing robust growth supported by strong demand, limited supply, and changing consumer behaviors. The insights provided by Raine & Horne Commercial shed light on the dynamic nature of Queensland’s commercial property landscape, indicating a positive trajectory for the sector in the foreseeable future.