The squeeze is on for the Gold Coast industrial market in 2023 with Colliers revealing the supply of fully serviced industrial land has fallen to an all-time low, pushing property prices to new highs amid sustained demand.

Colliers’ Director of Industrial Daniel Coburn says that despite rising interest rates, investors are as bullish as ever on the Gold Coast industrial market with low vacancy rates driving leasing deals and property sales.

“The industrial land shortage we have seen in recent years has become even more acute in 2023,” said Mr Coburn.

“That’s great news for investors already in the market as yields and capital values are on the rise, but it’s become much more challenging for the many businesses looking to establish a base on the Gold Coast.”

The latest Colliers Market Outlook February 2023 reveals that there has been an ‘extreme supply-demand imbalance’ across all industrial product types on the Gold Coast over the past year as land availability dries up.

“This scarcity of land and built product in core precincts is leading to capital and rental growth across all precincts,” says Mr Coburn.

“However, because development opportunities in core markets are becoming harder to find, businesses are increasingly moving further north of the city which has led to the rapid absorption of the limited supply of land in the Yatala Enterprise Area over the past two years.”

The Colliers report reveals that only 34ha of net land supply is available for purchase in Yatala, which equates to less than seven months of supply, given the average monthly take-up of around 5ha since the beginning of 2021.

Despite this, land at Yatala remains the most affordable of the Gold Coast industrial precincts, ranging from $500 to $600 per square metre for smaller lots and $400 to $500 per square metre for lots of 1ha or more.

This compares with prices of between $1,000 and $1,300 per square metre achieved for industrial land on the Gold Coast in areas outside of Yatala.

According to Mr Coburn, the Gold Coast industrial market is being led by demand from tenants and owner-occupiers which provides a firm foundation for future growth.

“Both sales and leasing markets are very strong across the city,” he said.

Among the major transactions in November and December last year were:

• 21 Dixon Street, Yatala, which sold for $7 million to a Melbourne-headquartered owner-occupier following an EOI campaign that drew enquiries from across the country;
• 37 Central Drive, Burleigh Heads, which sold for $3.3 million to a local investor in an off-market deal, and;
• 13 Northview Street, Mermaid Waters, which sold for $2.52 million to a local owner occupier following an EOI campaign that drew 11 offers.

The Colliers report says population growth has emerged as a key factor for the continued strength of the Gold Coast industrial market, with the transport, logistics and e-commerce sectors showing the biggest demand for new space.

But with few future land releases planned, the report warns that the Gold Coast is facing further price increases in core precincts as the supply of fully serviced industrial property hits an all-time low.

The Colliers report reveals that while the Gold Coast recorded the highest growth in average industrial rents nationally in 2021 with an increase of 35 per cent, prime rents in the city’s central and southern precincts rose at a more modest pace in 2022 – up by 3 per cent to between $150/sqm and $170/sqm for 1,000sqm to 5,000sqm premises.

However, rents in the Yatala Enterprise Area rose two to three times as fast, increasing between 5 and 10 per cent to between $130/sqm and $150/sqm amid sustained demand.

“Rising land values, construction costs, and general inflationary pressures are all exerting increased rental pressure on the newly built stock, as developers boost their prices to reflect these increases,” said Mr Coburn.

Despite the immediate supply challenges, the Colliers Director of Industrial remains optimistic that the Gold Coast market is set for further growth over the next decade.   

“With major southeast Queensland infrastructure projects under way and in the pipeline over the next five to 10 years, coupled with the record levels of migration to the Gold Coast, the outlook looks very positive for the market in the lead up to the 2032 Olympic Games,” said Mr Coburn.

Click here to view and download the report.

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