The industrial and logistics sector has recorded a bounce back throughout the second quarter of 2024, headlined by significant interest in the Brisbane market. 

Colliers’ Industrial Q2 Snapshot reveals there has been $2.1 billion worth of assets traded in Q2 of 2024, taking the total volume of the first half of the year to $2.70 billion across 67 assets. H2 2024 is expected to be strong as stabilising market conditions and positive market sentiment facilitate a number of significant deals, and established purchasers looking to re-enter the market after taking a wait and see approach over the past 18 months. 

Infill markets remain the primary focus, with 69 per cent of assets traded so far in 2024 stemming from such locations, up from 61 per cent in 2023 and 43 per cent in 2022.

While there is still a laser focus on the Sydney market, major capital sees opportunities in the Brisbane market given the strong growth fundamentals throughout the state, with population growth and infrastructure investment spurring this on. 

Colliers Managing Director of Industrial and Logistics, Gavin Bishop, said that approximately $350 million across three separate transactions, are set to occur in Brisbane in early Q3, a sign of the shifting sentiment towards the city’s sector. 

“Sydney is still viewed as the most desirable industrial market with Goodman’s $300m worth of acquisitions in the South Sydney market highlighting this, but institutions have started to shift their future vision to Brisbane. The combination of affordability, precinct amenity and infrastructure investment is fuelling the occupier market, with groups looking at prime assets within land constrained core markets,” Mr Bishop said. 

Brisbane’s industrial market has been the first mover in regard to a shift in yields, which have tightened over the quarter due to the weight of capital chasing available assets to market. In the Brisbane submarket Australian Trade Coast (ATC), average prime yields have tightened by 25 basis points over Q2 to now range 5.50-6.50 per cent with total market average prime yield tightening by 5 basis points from 6.25 to 6.20 per cent. 

“Everyone is getting set for the Olympics, with offshore groups and new entrants set to place themselves in Queensland heading into the second half of 2024. Major domestic and offshore investors who have traditionally focused on the office and retail sectors are now shifting their preference to industrial, with a real move towards Brisbane due to the returns and strong market principles,” Colliers National Director of Industrial and Logistics, Sean Thomson said. 

“Population growth has been a significant factor driving economic growth in Queensland, with population increases consistently exceeding 30,000 every quarter, more than double pre-pandemic rates. With more than $27 billion earmarked for capital works in the 2024-2025 financial year, the state has an incredibly promising future.”

Whilst overall vacancy has increased slightly, Brisbane’s largest industrial submarket, ATC, is one of the lowest submarkets nationally and has been the most stable over the last 12 months, recording virtually no change 1.3 per cent to 1.4 per cent.

“We’re seeing significantly more interest in the Australian market with offshore groups, given we expect to see more alignment of pricing and the perception is interest rates will come down at the end of the year. With this in mind, cashed-up groups are now looking to invest and we expect to see a higher volume of sales similar to 2022,” Mr Bishop said.