_Industrial vacancies down by 36% over 2017 in Brisbane, Australia

The Brisbane industrial market has continued the strong run of space absorption during 2017, with a further 15% fall in total vacancy during the third quarter. The current level of 479,388sq m (properties 3,000sq m+) is now 36% below the January 2017 cyclical high of 743,558sq m. 

Improvement to vacancy has occurred across both prime and secondary space during 2017 with prime down by 34% and secondary down by 37% since January 2017. However over the past quarter the vacant prime stock was largely stable, falling only slightly to 233,823sq m. This has kept the prime vacancy at the lowest level seen since April 2014.

After increasing slightly in Q2, the secondary market has recorded another strong fall in Q3, reducing by 26% to 245,565sq m. Take-up was strong at 111,394sq m with limited additions to vacancy. Secondary space dominated take-up with 73% of the space absorbed, with a number of larger secondary tenancies absorbed on both a short and longer term basis.  This has gone some way to reducing the number of larger secondary stock options, with six 10,000sq m+ options remaining available.  

Speculative stock available in the Brisbane market increased by c7,000sq m  in the past quarter to 61,602sq m with the take up of a small development in Yatala overshadowed by the start of construction on a 10,435sq m project at Rochedale.

There is currently 47,927sq m of completed speculative stock available with 13,675sq m under construction. There are a number of proposed speculative developments across the Trade Coast, South and South West, with further significant building construction starts expected in the new year.

Take-up remained high in the third quarter with 152,005sq m recorded. This is 90% above the long term average and the fifth consecutive quarter of above average take-up recorded. In this past quarter take-up was dominated by secondary space (73%) across 17 properties with a good mix of large and smaller assets absorbed. Prime take-up was 40,611sq m across eight assets with the largest the 11,608sq m leased at 30 Main Beach Rd, Pinkenba by the AFP. 

Anecdotally the level of activity in the leasing market is still elevated, with further reductions in total vacancy expected through to the end of 2017. While still at relatively high historical levels, the reduction in available stock may trigger additional speculative construction or drive more tenants to consider a longer term D&C option.

The leasing environment still favours tenants, with short term leases available, enhancing the potential for tenants to hold-over in their current premises while seeking a D&C solution for their longer term business needs. 

Demand has remained broad-based with logistics providers, retailers (particularly furniture and household goods) and building product suppliers being the most active. Packaging tenants have also been active, although to date, have favoured D&C options over existing product.

For further information, including a break down of vacancy by precinct see the full report.