The Australian Tradecoast industrial market is currently the best performing industrial market in Australia as of Q1 2020. Bolstered by multibillion-dollar investment projects into the Brisbane Airport Precinct, major arterial upgrades, the inland rail and Port of Brisbane dedicated freight rail connection and multiple new large development projects, the Tradecoast has experienced the most significant growth in capital values and land values in the country and is set to continue strongly post COVID-19 with the industrial sector is proving to be the most resilient.
COVID-19 has forced businesses to consider their property position whether they are a owner or a tenant. Critical analysis of how to operate in the current climate and moving forward has created the need for change and in some cases a new property strategy.
The need for modern, efficient and well located property has generated churn in the marketplace.
With historic low interest rates and a lack of quality investment properties on the market, investors are still firmly in the market. While yields are set to firm up, investors are still seeking investments with strong covenants on long leases. We are seeing a consistent trend in current tenants looking to become owner occupiers as in many cases it is more affordable to purchase than to continue leasing, capitalising on the low interest rates. Existing owner occupiers are also active in up or downsizing their businesses into more suitable and viable properties.
Throughout 2019 and well in to 2020, there has been limited property on the market for sale however strong demand from all buyer profiles. The influx of multiple buyer profiles is causing demand to outweigh supply and yields to compress, resulting in prices rising for tenanted investments, vacant buildings and development sites across all asset classes. We anticipate there to be a flow of properties put on the market as the true impact of COVID-19 hits some property owners.
We have transacted several short-term flexible leasing deals to keep up with demand of businesses who are thriving during the COVID-19 period. Various month by month and 6-month leases have been executed at market rates to ensure businesses have locations to hold more supply to service their demand.