Brisbane Industrial Sales Fall as Owners Hold

Brisbane Industrial Sales Fall as Owners Hold

Sales of large industrial assets (over 5,000 sqm) in the Brisbane metropolitan area fell by almost 70 per cent in the second half of 2016 due to limited stock, says Ray White Commercial.

Ray White Commercial QLD Associate Director Industrial Transactions, Dan Costello, said sales of assets over 5,000 sqm accounted for $325 million in the second half of 2016, which is down 67.76 per cent on the same period in 2015.

“Despite investment demand being high for prime stock during the 2016 calendar year, the volumes have not demonstrated the robustness of this pool of purchasers,” Dan Costello said in the Between the Lines – Brisbane 5,000 sqm plus Industrial Sales Market February 2017 report.

“We have seen for much of this year institutional interest in industrial property high as investment yields continue to compress across many asset classes. The long-term nature, particularly for new, purpose built assets with long lease terms have becoming increasingly attractive.

“However, limited quality, prime stock available to the market due to owners opting to hold during this time of low interest rates and reducing yields has resulted in this reduction in total market volumes over the last couple of years.

“Sales turnover achieved $635.026 million during the 2016 calendar year after achieving $1.021 billion in 2015 and $1.527 billion in 2014.

“Looking ahead, this trend is expected to continue. However, with many tenants moving to new, purpose built facilities the backfill stock may start to make its way into the market in the form of large, vacant assets.”

Ray White Commercial Head of Research, Vanessa Rader, Brisbane industrial yields have also demonstrated a change in “prime located” assets with the more traditional South precinct achieving a higher yield range compared to the emerging Logan Motorway or the Australian TradeCoast (ATC) locations.

“As stock has been difficult to source, the second half of 2016 saw some slight change in yields compared to the prior periods,” she said.

“With limited sales in ATC there was some slight increase from the 7.25 per cent stable average to 7.3 per cent. However, Logan Motorway has continued its decline as more investors look to this emerging precinct and the new assets and long lease terms it provides now average 7.45 per cent, compressing 75 basis points in the last two years.

“The South has been showing consistent falls from a higher base rate and with strong sales volumes in the second half of 2016 saw yields within the 6.75 per cent to 8.0 per cent range yet average 7.60 per cent.”