APPD Market Report Article

Brisbane

August 26, 2022

Annabel McFarlane, Senior Director - Research, Australia

7.0%

AUD 119

Rents
Rising

Gross take-up was the second highest quarterly result on record

  • Occupier demand, as measured by gross take-up (>3,000 sqm) totalled 253,600 sqm in 2Q22. Within the Brisbane market, 4Q07 was the only quarter since JLL began tracking the market to record higher take-up (295,400 sqm) and was more than double the historical average (120,400 sqm). The manufacturing industry was the largest contributor to activity over the quarter, accounting for 33% of take-up.
  • Occupiers of all sizes were actively leasing in 2Q22, with six deals over 10,000 sqm recorded. The Southern precinct accounted for 66.0% of take-up across the market, while much of the remaining activity occurred in the Trade Coast, recording 32.3% of take-up. Finally, the Northern precinct recorded one deal which contributed to 1.7% of total take-up.

Six projects reach completion over the quarter

  • A total of 124,400 sqm of projects reached completion over the quarter in the Brisbane market, across six projects. One project completed in the Trade Coast submarket, and the whole 9,982 sqm was pre-committed upon completion. The remaining five projects were situated in the Southern precinct, of which 32.7% was pre-committed upon completion.
  • There is currently 435,800 sqm of projects under construction across 28 projects in the Brisbane industrial market. Twenty-three of these projects (269,600 sqm) are expected to complete over the second half of 2022, while the balance (166,200 sqm) is expected to reach completion over the course of 2023. There is an additional 727,500 sqm of plan approved stock currently in the supply pipeline.

Rental growth in the Northern precinct outpaces the market

  • Prime existing rents grew 4.1% q-o-q across the Brisbane market over 2Q22. The Southern and Trade Coast precincts recorded 3.2% and 3.6% of growth respectively over the quarter, while the Northern precinct recorded a growth of 5.4% q-o-q. Rents in the Northern precinct have now increased 16.6% over the past 12 months, which is more than double the other Brisbane precincts.
  • There was no yield movement across the Brisbane market in 2Q22. The prime mid-point in the Southern precinct remained the sharpest across Brisbane at 4.5%, while the Trade Coast and Northern precincts were slightly softer at a 4.6%. The secondary yield range across all precincts also remained unchanged over the quarter at a mid-point of 6.0%.

Outlook: Strong occupier demand is expected to drive rental growth

  • As exhibited over 2Q22, occupier demand across the Brisbane market is expected to remain considerable over 2H22. Spurred on by supply chain re-configurations and business growth, this is expected to have a flow-on effect to rental rates across the market. Rent growth will likely continue to be most pronounced in the Northern and Trade Coast precincts where available stock is limited.
  • Due to changing macroeconomic conditions within Australia as well as internationally, it is likely that the Brisbane industrial market has now reached the bottom of its yield cycle. Larger-sized transaction activity is expected to slow over the second half of the year, and yield ranges should begin to gradually widen.

Note: Brisbane Logistics & Industrial refers to Brisbane's industrial market (all grades).

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