Commercial property across Queensland has had a stellar run in 2022, Raine & Horne Commercial’s Q4 2022 edition of Commercial Insights has found

• Raine & Horne’s Commercial Insights Q4 2022 Report confirms industrial property assets throughout Queensland are the sector's star performers.
• The industrial property market continues to attract cash buyers in the sub-$5 million price bracket.
• The rising interest rate climate is likely to see yields among office and retail assets rise in the next 12 months. Still, yields on industrial assets were expected to remain the same due to the combination of high demand and tight supply.
• Owner occupiers seeking industrial assets for distribution-related businesses, as well as those in food packaging and consumer goods, were driving the demand.

Queensland (18 January 2023): Commercial property assets in Queensland are in hot demand, with industrial land in some regions being snapped up for more than twice the price it commanded less than three years ago, Raine & Horne Commercial’s Q4 2022 edition of Commercial Insights has revealed.

Commercial Insights confirms owner occupiers seeking quality industrial assets for distribution-related businesses, in addition to those in food packaging and consumer goods, were driving the demand.

Since the pandemic, industrial property has become a star performer of the commercial property sector, and many Raine & Horne Commercial property experts have reported that investors in the sub-$5 million range were often cash buyers.

As a result, this helped to soften the market against the impact of the successive interest rate rises.

While the rising interest rates were predicted to see yields amongst office and retail assets rise in the next 12 months, yields on industrial assets were expected to remain the same, thanks to the combination of high demand and extremely tight supply.

Future performance of industrial markets in Brisbane North look promising

While retail markets in the Brisbane North region were generating yields on average of around 4.5-5.5%, offices 6-6.5%, and industrial assets were securing yields of 5-6%.

Mr Trent Bruce, Managing Director Brisbane North, said interstate migration and a continuation of strong spending patterns by consumers suggested not much will change in the short term.

“However, if interest rates continue to rise into 2023, we expect the market will return to a more normal supply/demand situation.”

In the industrial sector, Mr Bruce notes the market was showing no sign of slowing down, with extremely low vacancy rates, growth in online shopping and the continuation of interstate migration.  

Mr Bruce said, “Industrial vacancies are currently below 1%, which has been caused in part by companies holding higher levels of inventory combined with an increase in storage requirements for online shopping businesses.”

The retail sector property also produced strong results. To illustrate, Mr Bruce and Mr Dave Miller recently negotiated the sale of a fully leased medical/retail investment at 723 & 727 Albany Creek Road, Albany Creek, for $8.3 million. The property was marketed for sale via an auction campaign which attracted more than 150 enquiries throughout the six-week campaign.  The vendors accepted an offer from a local investor in the days before the auction.    

Brisbane Southside industrial market a star performer

Low supply and high demand were likely to see industrial prices buck the trend of softening yields, according to Mr Joseph Grasso, Principal/Director Commercial Brisbane Southside.

He explained industrial and retail properties were generating yields of 5.5-6%, rising to 5.75-6.25% for office space.

Meanwhile, across Brisbane South, vacancy rates continue to be low, and in the industrial market, rates were 3%, rising to 6% and 8% for retail and office properties respectively.

Low supply, high consumer demand and low unemployment were driving the market, with Mr Grasso predicting the landscape might change in the second half of 2023 but rising interest rates were currently having little impact.

Demand for regional Queensland commercial property

Small to medium warehouses available for lease were limited as owner-occupiers took advantage of low interest rates on offer, according to Mr Peter McCann, Sales and Leasing Executive Commercial Townsville.

As a result, prices per square metre have shifted to anywhere between $130 and $180 sqm.

“Solid sales and leasing growth in 2022 for industrial properties have seen an increase in commercial land sales,” Mr McCann said.

“Some industrial properties have sat dormant for years, and developers are reaping the benefits by building small industrial estates to meet demand.

“The suburb of Garbutt remains the place to be for small to medium businesses who still want to be close to the suburbs and the CBD.”

In Hervey Bay, one of the primary growth centres servicing Queensland’s Fraser Coast, commercial property sales and leasing enquiry are strong across the board, while a lack of land on the Gold Coast is driving demand.

Breakout: Yields achieved across regional Queensland commercial property markets

Gold Coast: 5-6% for retail assets, 6-7% for industrial property, and as high as 10% plus for office space.

Mackay: 6.5-7% for retail assets, 7.25-8% for industrial property, and 8.5-9.5% for office space.

Sunshine Coast: Across the commercial property market yields were about 6% but can fall to 5% for some offices depending on the quality of the tenant.

Townsville: Across office, retail and industrial yields were anywhere between 7% and 9%.

For a copy of the Raine & Horne’s Commercial Insights Q4 2022 click here