Smaller industry unit market buoys Toowoomba confidence

THE Toowoomba region is showing continued signs of confidence in its industrial market following an uptick in sales activity over the 2017/2018 financial year.

New Ray White Commercial research found activity in the smaller industrial unit market was driving the positive surge, with a greater demand-led attitude towards construction of all sizes.

“The Toowoomba region has been the recipient in the past few years of a high volume of new supply, most notably the smaller industrial unit product,” said Ray White Commercial head of research Vanessa Rader.

“This has caused some increases in occupancy levels, however more recently this has started to subdue as construction levels slowed. This move towards demand-led supply is positively impacting the total market.”

The Between the Lines Toowoomba Industrial Overview August 2018 report flags 26 current industrial projects totalling 67,484sq m at various development stages across
the region.

The bulk of stock is in the DA-approved category and are unlikely to commence construction until commitment is sourced, keeping vacancy tight and rental rates stable.

Ray White Commercial’s June survey of vacant industrial stock across the Toowoomba region found 159,222sq m of vacancies across 225 properties, excluding hardstand and land.

Despite the high result, vacancy levels have reduced 8.15 per cent from 173,357sq m recorded in October 2017, representing the absorption of eleven properties.

Ms Rader said the bulk of space comes in the smaller size ranges which highlights increased activity by private investors.

“We witnessed over the last 12 months an increase in the number of owner-occupiers seeking these assets due to the low interest rates, low purchase price which could be bought via tax effective structures such as SMSF’s which has further limited the pool of tenants for this type of stock,” she said.

Meantime, sales volumes for the Toowoomba region industrial market were elevated during the 2017/2018 financial year as a greater pool of investors looked to capitalise on low interest rates and sought out the high yielding investments.

Industrial transactions totalled $47,604 million, up 21.41 per cent on last year’s result and a huge 127.89 per cent on the 2015/2016 result.

“These two consecutive years of uptick have been heavily driven by both the local and intra/interstate investors seeking affordable investments as an alternative to residential which offer low returns,” Ms Rader said.

“During this time we have seen a marked improvement in the number of enquiries for assets in the sub-$1 million price range with yields consistently falling each year.”