The industrial sector emerged from the COVID-19 pandemic as a popular asset class with investors. Whilst the pandemic softened demand fundamentals in the more traditional sectors of office and retail, the industrial sector benefited from heightened occupier demand, driven by numerous factors including strong e-commerce growth and a return to more localised manufacturing. More recently, strong population growth has been a major driver of continued strength in the occupier market.

As a result of strong occupier demand, coupled with construction delays, the industrial market has witnessed extremely low vacancy rates. As of Q4 2023, the vacancy rate was recorded at 1.9%. The low vacancy rate has driven rental growth at levels not seen before, as well as a sharp reduction in incentives, over the past year.

Following record levels of investment activity over previous years, transaction values have been subdued during 2023. Investors have displayed heighted caution this year given the uncertain economic and pricing environment. These conditions have resulted in a softening of circa 100 basis points in both prime and secondary industrial yields across the South East Queensland market.

The manufacturing industry’s contribution to the economy has broadly trended downwards since the 2007-08 financial year. Despite ticking up during the pandemic, it tapered back again during the 2022-23 financial year. The Transport, Postal and Warehousing industry’s contribution to the economy declined sharply during the start of the pandemic, before rebounding over the past two fiscal years, driven by growth in e-commerce, business’s focus on supply-chain efficiencies, and higher business inventory levels (“just in case” inventory management). This trend has been reflected in industrial space absorption, with users from the Transport, Postal and Warehousing industry consistently accounting for significant shares of leasing demand.


SEQ industrial market outlook featured photo

SEQ industrial market outlook

Overview

The industrial sector thrived post-COVID due to increased investor interest and heightened demand from e-commerce growth, local manufacturing, and population growth.

Industry outlook:
  • Overview
  • Supply
  • Rents
  • Investment market
  • Outlook

Every journey begins with a conversation

Wondering how we can turn your vision into reality?
Complete your details and we’ll be in touch as soon as possible.

"*" indicates required fields

Name
This field is for validation purposes and should be left unchanged.