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Higher Rents Pushing Tenants Out of Brisbane's Trade Coast: Report

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Brisbane’s western corridor is set to emerge as one of the most in-demand regions for industrial businesses, due to increasing trade activity from the Port of Brisbane and higher rents pushing tenants out of the Trade Coast precinct, according to a new CBRE report.

CBRE’s ViewPoint analyses cost comparisons between the Trade Port and western corridor regions and highlights the significant cost savings that can be achieved, over a long term lease, in areas further removed from the Port of Brisbane.

CBRE Research Analyst, Tom Broderick, said rents for warehouses of all grades have generally been higher around the port compared with other areas in the greater Brisbane region, due to high tenant demand for close proximity to the port.

“With innovations in the land transportation industry combined with recent falls in the price of oil, areas outside of the Trade Coast (port) precinct are becoming much more attractive for businesses looking for cost savings.”

Demonstrating this trend, CBRE has recently completed a design and construct lease transaction with a port related vehicle storage group, Prixcar, who found the rising costs on the Port of Brisbane land to be cost prohibitive.

They have moved a substantial section of their business to a location in the southern Brisbane market, that provides them a substantial cost saving and is actually closer to sales yards of the car dealerships.

Another example of the benefit of the costs benefits of this location has been the recent move of DB Schenker from the Brisbane Airport/Trade Coast precinct out to the western corridor.

The costs benefits were the reason for move for the business, however the long term access to major arterials is now also a very strong benefit.

Peter Turnbull, CBRE Director Industrial & logistics Services , said; “These recent transactions prove that tenants want to occupy more affordable accommodation and as long as the sites have access to major arterials and motorways then there is very little downside.”

A company looking to rent an industrial warehouse in Brisbane could save $5-$15 per square metre for an asset in the western corridor compared with a similar grade of building in the Trade Coast, according to CBRE analysis.
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“The average savings in rent for a warehouse in the western corridor compared with the Trade Coast is approximately $10 per sqm. Therefore a business could save $100,000 per year in rent for a 10,000 sqm facility,” Mr Broderick said.

As a site in the western corridor may be 60km from the Port of Brisbane compared with 10km for a site in the Trade Coast, rental savings need to be balanced against increased transportation costs to and from the port.

“The increased freight cost for the property out west is estimated to be around $38,000* per year compared to a site close to the port," Mr Broderick said.

"Therefore a net saving of approximately $62,000 per year could be achieved in this instance, which would be significant across a long term lease.

“Moving outside of the Trade Coast area may not be appropriate to all tenants; however there are ample opportunities for tenants to save on rent if they are willing to move further from the port, particularly those that are leasing large amounts of space.”

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Article originally posted at: https://theurbandeveloper.com/articles/higher-rents-pushing-tenants-brisbane-trade-coast-report