For the first time in the 13-year history CommSec’s State of the States report, Queensland has come out on top of the quarterly surveys – a ranking of economic performance, which means good news for Brisbane’s burgeoning industrial real estate markets.
Queensland’s economic activity has benefited from a strong relative and absolute population growth, a solid job market and buoyant overseas demand for energy resources, such as coal and natural gas.
The CommSec State of the States report uses the latest available information to provide an economic snapshot of each region by comparing annual growth rates for eight critical indicators, including economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements.
Regarding the report, CommSec Chief Economist Craig James commented on Queensland’s ascension to the top economic rankings.
“Queensland has a strong report card, ranking first on relative population growth and relative unemployment, and is second-ranked on three of the other eight economic indicators.
“When looking at annual growth rates to get a guide on economic momentum, Queensland had annual rates that exceeded the national average on five of the eight indicators.
“In terms of future economic performance for all state and territory economies, much will depend on the performance of housing and job markets at a time of higher interest rates.”
Joseph Grasso, Co-Principal, Raine & Horne Commercial Brisbane Southside, says the positivity around Queensland’s economy and the population growth was good news for commercial real estate, particularly industrial property.
“There’s no doubt interstate migration and the increases in royalties paid by the mining companies in the state have contributed to more money flushing through the economy.
“The boom in interstate migration to Queensland is demonstrated by the lack of residential housing in this state, and rents are up as a result.
“Population growth is great for demand for commercial property,” Joseph added.
At the same time, Joseph explained that there had been a structural change in how industrial, retail and office assets are being viewed in Brisbane. “Retail and office were always the flag bearers. But this has changed since COVID with the growth in demand for industrial space to support e-commerce logistics.”
“I remember when e-commerce sales were 6% of total sales, and they are now closer to 15%. Every time e-commerce sales go up approximately 1%, one industry report suggests we need an extra million square metres of industrial space to accommodate this additional online spending.”
Last mile demand
Joseph added that there is increased demand for “last mile logistics” space in Brisbane. A product’s journey involves a move from the warehouse shelf to the back of a truck to the customer’s doorstep—the final step of this process is known as the “last mile of delivery.”
“On the southside of Brisbane, there are distribution warehouses ranging from 10,000 – 50,000 square metres on the Logan Motorway because of this road’s excellent access to the Gold Coast markets and the greater Ipswich region to the west. It also links with the Gateway arterial servicing Brisbane’s north bypassing inner city traffic,” Joseph commented.
“But then in more established areas such as Rocklea, Coopers Plains and Acacia Ridge, logistic companies are renting smaller sheds of 2,000 – 4,000 square metres for last mile activities. These warehouses hold the most ordered inventory to ensure these items are delivered to consumers very quickly.”
The demand for industrial sheds for logistics purposes has seen significant rental increases. “Over the last 12 – 18 months, industrial rents in Brisbane’s south have risen from about $100 per square metre to $130 on average.
“This is the first time in a long time that I have seen a sizeable jump in industrial rents. This situation is being compounded by a lack of new industrial stock coming online,” Joseph said.