Queensland’s Industrial boom is showing no signs of slowing down in 2022 with eCommerce and the 2032 Olympics among the factors driving growth and positioning the market as an increasingly attractive option for investors.

Queensland’s Industrial market has the lowest yield compared to retail and office, which is being driven by several trends says Shaun Canniffe, JLL’s Head of Industrial Queensland.

“At this point in time, the industrial market is the strongest we’ve seen it historically. We know that the COVID-19 pandemic has strengthened the industrial sector. There has never been more general awareness about the impacts of supply chains on our day-to-day life and that’s captured a new audience who will continue to drive rental growth within our market and that will inevitably drive capital growth moving forward,” Canniffe says.

“The strength of the market is also being driven by the low cost of debt and an extraordinary amount of capital looking to be placed within the industrial sector in Australia.

“The most prominent theme that I’d highlight is the rental growth we are experiencing and the strong occupier demand coming through. This is helping to reinforce investment decisions that have already been made within the sector but also bring a whole weight of new capital to the sector on the confidence of that occupier market.”

JLL research shows industrial sales in the Brisbane market in 2021 accounted for 16% of the national total. While transaction volumes in Brisbane were less than half of the Melbourne market, the number of transactions in Brisbane (121) was the highest in the country. This suggests a high level of liquidity in the Brisbane market spurred on by private owners bringing assets to market to capitalise on the strong investment markets.

Canniffe says investor perceptions of Brisbane are changing and the city has seen increased activity over the past two years.

“Historically, we’ve been considered third on the Eastern Seaboard behind Sydney and Melbourne, but we’ve really seen over the last 12- to 24-months that the gap is closing,” Canniffe says. “We’re not at an equilibrium but we are certainly heading towards one. This is being seen as the yield arbitrage between Sydney prime industrial yields and Brisbane prime industrial yields continues to tighten and I think that will continue to do so.

“There are a number of factors contributing to this. There is no doubt there is insufficient stock levels in Sydney and Melbourne to satisfy investment demand and therefore investors are inevitably looking north to Queensland. That’s also underpinned by the strong fundamentals of our state and our city with $50 billion of infrastructure projects currently underway and the 2032 Olympics which is going to have a massive impact on all our property markets within Queensland. This is also driving interstate migration and we continue to experience strong population growth as well. The sum of all these parts is we’re certainly heading towards an equilibrium in terms of investment destination for capital seeking Australian industrial property.”

Find out more about the key trends and insights shaping Queensland’s industrial sector here.