Capital value growth and net face rents drive Yatala industrial appeal

THE Yatala industrial region* has seen swift capital value growth and yield compression as well as strong upward momentum in industrial net face rents in Q3, according to Ray White’s latest Between the Lines** research.

In late 2017, high local demand coupled with many interstate investors investigating higher yielding investment options saw the Gold Coast as an affordable option, which drove yields down and reached new highs in capitalvalues.

Despite some changes to financing regulations and many non-local buyers leaving the market, Yatala industrial assets continue to be in hot demand by locals, keeping values elevated.

Ray White Industrial M1 North Team Leader/Sales and Leasing Consultant Lisa Dunne said the small industrial market has been heavily reliant on business confidence in the Gold Coast which has played a key role in these results.

“The 1H 2018 has highlighted some outstanding results for the small industrial market across the Yatala Enterprise Area which has followed into 3Q,” Ms Dunne said.

“Record sales levels and continued capital value growth driven by a strong local market have bucked the trend of many other investment markets around the country.

“Limited investment sales have resulted in some volatility in yield, yet remain competitively low for quality stock.

“Stand-out growth in net face rents for the smaller sub 250sq. m industrial stock shows also highlights the confidence of small business in the Gold Coast region.”

Ray White Commercial Head of Research Vanessa Rader went on to say despite the blip in 1H, where rents achieved $126sq. m, the Q3 trend has recovered to reflect previous strong growth in the Yatala industrial region.

“Net face rents have grown on average 9.77 per cent p.a. over the last five years, with 3Q 2018 now averaging face rents at $133/sq. m, with an average tenancy size of 156sq. m,” Ms Rader said.

“The size range up to 250sq. m continues to be in strongest demand by small businesses and key to fueling this ongoing growth. Those assets larger in size over 500sq. m have seen reduced enquiry with longer days on market and require greater incentive to commit.

“Overall, sentiment across the Gold Coast has remained robust, small business confidence is instrumental to the longevity and growth of the industrial market.”