Costs still in free-fall
Wednesday 13 July 2016
INDUSTRIAL tenants in the major resource sector localities like Paget in Mackay, continue to enjoy unprecedented falls in rental costs at the expense of landlords, and there could be further to go according to property valuers Herron Todd White (HTW).
In their latest monthly report on commercial property values in Central Queensland, HTW says Mackay, Gladstone and Rockhampton are all seeing historically low rental rates for industrial real estate, with Mackay the worst hit.
Driving down the rental costs is an oversupply of buildings built during the height of the mining construction boom, and the persistent fall in demand from businesses suffering during the downturn.
In Mackay, rental rates have more than halved for industrial strata units and warehouses with rental agreements as short as one year now not uncommon.
“Recent evidence suggests rent for this type of product ranges from $60 to $100 per square metre net (i.e. plus outgoings),” HTW said.
“This is significantly down from the levels achieved in 2011 and 2012, which saw rents typically from $150 to $200 per square metre.
“It now appears that some landlords are simply attempting to attract a tenant to cover property outgoing costs, and given the high volume of vacancies, this has the potential to push rental rates further down.”
In Gladstone it is a similar story with HTW reporting a newly struck lease in Callemondah was negotiated at a rental rate 57% lower than the one signed with the previous tenant.
“The rental reflected $99 per square metre gross for a 510 square metre shed with a 120 square metre office block.
“We are aware of additional new rentals that were negotiated during 2015 which have fallen much in line with the nearby Rockhampton market, with rental levels between $100 and $150 per square metre gross.”
Once again Rockhampton has shown itself to be a less excitable market, with HTW saying the downward pressure is not as strong.
“Rental levels for industrial property in Rockhampton appear to be remaining steady, with less downward pressure than nearby Gladstone, Mackay and Emerald,” they said.
“This is in most part due to the diversity of the Rockhampton market and lesser dependence on the fortunes of the resources sector.
“Rental levels for heavy duty well located industrial workshops are falling to a range of $130 to $150 gross per square metre, with rentals for smaller workshops and sheds falling to a range of $90 to $120 gross per square metre, depending on various factors.”
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