Industrial leasing markets shows signs of weakness

Photo courtesy of auspropertyprofessionals.com.au

The Gold Coast’s industrial leasing market is showing signs of weakness as tougher economic times start to bite, according to an expert.

Writing in valuation firm Herron Todd White’s monthly Property Review, Ryan Kohler, a director of valuation firm Herron Todd White Gold Coast, said that in recent years the industrial leasing market on the Gold Coast had been exceptionally strong

Mr Kohler said rental rates had been reaching historic highs and vacancy rates had been remaining low.

“However, agents are now reporting more challenging leasing conditions, with signs of tenant rental stress and an increase in lease abandonment,’’ he wrote. 

“This shift suggests that the market may be entering a period of adjustment after several years of rapid growth.” 

Mr Kohler said the region’s industrial property market had undergone significant changes in recent years, particularly in entry-level opportunities.

He said the market, like the residential market, had seen substantial increases in land values and construction costs, making it more challenging to find affordable industrial properties. 

“For everyday investors, opportunities to purchase freehold industrial assets remain limited due to restricted supply and strong underlying demand,’’ Mr Kohler said. 

“The entry-level price for a small freestanding industrial building or complex in central Gold Coast is now approximately $2 million to $2.5 million. 

“However, these assets typically offer lower yields, often below 6%, as investors face stiff competition from owner-occupiers who are less focused on yield and more on affordability.”