Corporate Park East
Owner’s Report - August 2024
Corporate Park East Summary
Welcome to our quarterly wrap up of Corporate Park East activity.
Amazingly, there are now only three lots in the first three stages that haven’t been completely built out or occupied! Supply constraints of land continue to be the most consequential factor impacting this region and we have seen another round of record rates achieved in all size brackets.
Completion of the final two sold out stages of the estate is progressing well, in spite of the consistent rain through the first half of the year. We are now working with those lucky enough to have secured blocks to help them match their building designs to business demand. Settlement of the final lots is expected in the first quarter of 2025, with the first buildings reaching completion in the second half of the year.
The following report is designed to help you make better commercial property decisions, based on real time market evidence and observations from our team at the coalface. We trust you will find some useful insights in this report and invite you to call up or call in to our office and discuss what this all means for your specific property and where the opportunity might be for you.
ChrisMassie Director 0412490840
chris.massie@raywhite.com
AaronCanavan CommercialPrincipal 0447744948
aaron.canavan@raywhite.com
JamesGarnett
Sales&LeasingAssociate 0422087745
james.garnett@raywhite.com
TroySturgess Sales&LeasingExecutive 0432701600 troy.sturgess@raywhite.com
AshleyRees Director 0411707410
ashley.rees@raywhite.com
MichaelNides
Sales&LeasingAssociate 0468517956
michael.nides@raywhite.com
Market Drivers
“These are the market factors that are shaping the landscape for your Corporate Park East property in the coming year”
-Ashley Rees, SeniorAnalyst
POPULATION GROWTH
We have the population of Rockhampton moving to Caboolture over the next few decades. Caboolture West and Morayfield South will house more than 100,000 new residents. Add to this the continued expansion of the Southern Sunshine Coast and you have one of the most significant residential growth corridors in Australia.
LAND SUPPLY CONSTRAINTS
The next five years in particular will see further tightening of what is already a chronic supply shortage of industrial land in the region. Vacant industrial rates have increased from $285m2 in 2020 to over $600m2 in 2024. There is now no remaining land earmarked for General Industry subdivision between Caboolture and Brisbane. Future industrial land supplies to the north and west of Caboolture face major infrastructure hurdles and in any case would only provide enough supply to satisfy current demands and will barely scratch the surface of what is trulyrequiredtoservicethisgrowingpopulation
CONSTRUCTION COSTS
Construction prices have been a major source of the CPI issues that drove the interest rate hikes of 2023. There has been a perfect storm of international conflict, labour shortages, fuel, materials and competing infrastructure projects impacting all facets of commercial construction. The South East Queensland market has been impacted more than most areas due to the Olympic infrastructure pipeline of projects that has taken tier 1 builders out of the private industrialconstructionpool.
AFFORDABLE HOUSING & LABOUR
More than 100,000 Moreton Bay residents are forced to leave the shire every day togotowork. Industrialbusinessesacrossthecountryarestrugglingtoaccessthe necessary skilled labour and housing affordability and cost of commuting are the twofactorsthatdictateworkforcelocation.Caboolturehasthepotentialtosupply close to 40,000 new homes, spurred on by the Government’s Affordable Housing mandate. This is proving doubly attractive for businesses in the trade services and building supply industries, who want to position themselves to servicing the demand from the same residential construction projects that this new labour force willcallhome.
Sale Demand & Transactions
Owner Occupier Sales:
The last six months has seen a real spike in sale prices for completed stock in suburbs like North Lakes, Brendale and the Sunshine Coast as their stock levels tighten. This has led to an increase in appetite from businesses based outside of Caboolture who now see us as a more affordable, yet viable option. Bruce Highway congestion south of North Lakes means a Caboolture address is actually proving desirable for businesses trying to attract staff from the large workforce catchment at Caboolture.
Sale Demand & Transactions
Investor Sales:
In the last report we predicted an increase in activity from investors transitioning from residential to commercial, due to the tightening restrictions on residential landlords. This has definitely been the case. The settling of inflation and stable interest rates, combined with confidence in the greater Moreton Bay growth and supply/demand metrics have given investors a more bullish outlook than we saw at the start of the year. The result has been an increase in vacant possession sales by investors looking to “beat the rush” on tenanted properties. This confidence has been rewarded, with one investor securing a tenant only two days after purchasing their vacant building (see 39Alta Road Case Study).
The glut of supply in the 150-300m2 lease market will likely put a few investors off, but the capital growth through land value and construction cost increases over the last year should give all owners comfort.
Tenant Demand & Transactions
Demand from businesses in the last quarter has continued the trend towards larger footprint buildings (500m2+). We have seen multiple small shed projects reach completion at similar times.This, combined with the softening in demand in this sub 300m2 range, is pushing out our average days on market. Stand alone buildings over 1,000m2 remain the most sought after product and the rates being achieved by our team have now pushed through the $170m2 net bracket.
Current Stock on Market
Of the 32 available tenancies for lease or sale across the estate, 22 of them fall into the 150-300m2 size bracket! We now have no complete buildings for sale over 300m2 and nothing for lease or sale between 460-1,030m2!
Like last quarter, we see the bulk of our current stock for both sale and lease falling within the sub 300m2 range, with a limited number of warehouses exceeding 1,000m2 also available.Those developers yet to build should be interested in the persistent gap in available stock within the 300-1000+m2 range.
For Lease For Sale
Current Stock - FOR LEASE
We see a slight glut of supply in the 150-300m2 range at the moment, with 14 completed sheds available for lease. Encouragingly, the lease rates being achieved for the last two quarters have remained strong.
Average net rental achieved for all sizes in the last six months has been $173m2.The supply shortage of larger buildings has removed the price difference you would normally expect between smaller and larger sheds, with the average for 150-300m2 sheds coming in only $2m2 higher than the larger stand alone tenancies.
Larger stand alone sheds have consistently been the product that spends the fewest days on market. We anticipate two of the three available 1,000m2+ buildings will be leased before the end of this quarter.
Current Stock - FOR SALE
Our enquiry is still heavily in favour of purchasing over leasing (just under 80:20 for last quarter). Steadying of interest rates and strong home equity growth still has business owners leaning towards buying.
It is quite alarming to see we now have nothing available for sale over 531m2 and nothing ready to buy today over 258m2! With no new stock expected to be complete in stage 5 until this time next year, we anticipate supply levels will continue to tighten and patience from owners looking to sell will be rewarded.
C
SOLD & LEASED | 39 Alta Road, Caboolture
$3,450,000
ACaboolture investor’s gamble on a brand new vacant warehouse paid off in 48 hours, thanks to RWC Northern Corridor Group’s Chris Massie andTroy Sturgess. The new tenant, Sinaboom Intelligent Equipment, secured the property on a five-year term at $175m2 net.
The new owner, who settled on the property for $3.45 million only days before, had their confidence rewarded with an almost immediate 6.5% return. “The buyer settled on the Monday, the paint dried on theTuesday, and we found a tenant on the Wednesday.” SaidTroy Sturgess.
“Investors should remember that the sales we see today are based on land rates from two years ago and build prices from a year ago. The opportunities become easier to spot through this lens.” Chris Massie
Chris Massie
Troy Sturgess
Aaron Canavan
C A S E S T U D Y
SOLD | 59 Evans Drive, Caboolture
Knowing that the owner’s desired outcome was to sell the property upon completion of construction, Chris and Troy focused their efforts on attracting both owner-occupier and tenants. They successfully negotiated a lease agreement with a Government department for$276,800,whichreflected$200m2gross.
While the gross lease added an element of difficulty with the investment sale, the strength oftheGovernmenttenantcombinedwithstrongsupportingevidence,gaveaninvestorthe confidencetopurchasethepropertyatasub-6%yield.
Understanding what impact lease structures have on buyer perception played a critical role in achieving this outcome. The supporting evidence and ability for Chris and Troy to speak with confidence to the asset and the region proved critical in establishing buyer confidence.
Chris Massie
Troy Sturgess
Aaron Canavan
Construction Progress
ChrisMassie Director-CommercialPrincipal 0412490840 chris.massie@raywhite.com
TroySturgess Sales&LeasingExecutive 0432701600 troy.sturgess@raywhite.com
MichaelNides Sales&LeasingAssociate 0468517956 michael.nides@raywhite.com
AshleyRees Director 0411707410 ashley.rees@raywhite.com
AaronCanavan CommercialPrincipal 0447744948 aaron.canavan@raywhite.com
NathanBeckett Sales&LeasingAssociate 0478078373 nathan.beckett@rayhite.com
