Good Things in Small Packages

June 5 2024

Discover how the Gold Coast industrial sector is marching to its own beat
Good Things in Small Packages

Industrial has long been the poster child of the commercial property sector, but things are a little different on the Gold Coast. 

Throughout this cycle of the market, small-format industrial has been the star of the show for purchasers and developers, rather than large format, which is the case nationally.  

For buyers, the lower cost of small-format industrial means a lower barrier to entering the sector compared to large-format industrial estates. Small format also appeals to a wider range of potential tenants as opposed to the relatively specialised large-format market. 

That means low vacancies and less risk, with ‘man caves’, storage and small businesses among the potential tenants. 

For developers, small format’s considerably shorter construction timeline compared to other sectors, particularly residential, is a plus. 

And it is a product that maximises a site’s available area – there’s little of the footprint that isn’t leased.

Read the full article to find out why small-format industrial could be the right investment for you 

Large format has been relatively neglected on the Gold Coast due to sites showing a higher level of profit if they’re maximised, as well as financing proving more favourable for small format. 

That is because it has proven a lot easier to obtain 50 per cent pre-sales on small format rather than securing a tenant or buyer as is needed for large format. 

Also, the availability of fully serviced industrial land is extremely limited, with areas such as Yatala having less than seven months of supply left.  

Low vacancies, high demand 

This scarcity has pushed up land prices significantly – prices range from $500 to $600 per square metre in Yatala, for example, compared with $1000 to $1300 per square metre in other parts of the Gold Coast. 

So, for investors, this sector on the Gold Coast is much in demand with very low vacancy rates driving leasing deals and property sales, and the rise in interest rates is doing little to dampen that. 

The low vacancy rate is driving up competition, providing an uplift in rent terms or covenants. 

Ultimately, that increases the value of the asset.  

With the city’s strong underlying fundamentals of high population growth and a shortage of land supply, it’s a situation that’s unlikely to change any time soon. 

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