Dear Clients,
I’m pleased to provide an update on the Brisbane industrial property market for Q1 2026, with a focus on the southside precincts. The market continues to demonstrate resilience, with tight vacancy, constrained supply, and ongoing rental growth supporting asset performance. While broader economic conditions have shifted, underlying demand for well-located industrial assets remains strong.
Queensland Economy
Economic conditions remain relatively stable, although the outlook has become more complex. Inflation has re-emerged as a key factor, with CPI rising to approximately 3.8% year-on-year, prompting the Reserve Bank to increase interest rates twice during the quarter to around 4.10%.
Despite this, the Queensland economy continues to outperform, with state economic growth forecast to reach 3.4% in 2026, supported by population growth, infrastructure investment, and a resilient labour market. Unemployment remains low at approximately 4.1%, helping to underpin occupier demand, particularly across logistics, manufacturing, and construction sectors.
Supply
Supply remains constrained, which continues to be a defining feature of the Brisbane market. Around 155,000 sqm of new space was delivered in Q1 2026, representing a significant portion of this year’s expected completions.
However, the broader 2026 pipeline has been revised down materially, with total annual supply now expected to fall below 300,000 sqm, making it the lowest level of new development since 2018.
On the southside, development activity remains concentrated across key corridors including the Western Corridor and South precincts, which together are expected to account for the majority of new supply. Importantly, a growing proportion of projects are being delayed or require pre-commitments before construction proceeds, reflecting tighter funding conditions and elevated construction costs.
This disciplined supply pipeline is reinforcing the ongoing imbalance between supply and demand, particularly in core infill locations.
Rental Rates
Rental growth has remained strong, supported by tight vacancy and limited availability of high-quality stock. Across Brisbane, prime net face rents increased between ~1.6% and 4.0% over the quarter, with annual growth now sitting at approximately 5.6% to over 10% depending on asset grade.
On the southside, rental growth continues to be driven by limited prime availability, particularly in the sub-10,000 sqm segment where tenant demand is strongest. Average prime rents now around $185–$190/sqm, and secondary averaging around $140/sqm.
Incentives have increased slightly, now generally ranging between 10% and 20%, which is moderating effective rental growth in some precincts. This reflects a more balanced leasing environment, particularly for secondary-grade stock, while prime assets continue to experience strong competition.
Vacancy Rates
Vacancy remains low by historical standards, although it increased modestly during the quarter. Brisbane’s overall vacancy rate sits at approximately 3.9%, up from around 3.4% in the previous quarter.
The increase has largely been driven by backfill space re-entering the market, particularly within existing facilities rather than new speculative supply. On the southside, vacancy remains elevated relative to other precincts but is still tightening in key segments, particularly where leasing activity is strongest.
Importantly, a number of large leasing deals are currently under negotiation, which are expected to reduce vacancy levels through the remainder of 2026. Limited new supply and fewer future backfill options are also likely to place downward pressure on vacancy moving forward, particularly in core southside precincts.
Yields & Investment Activity
Investment activity has normalised following a strong 2025, with approximately $140 million in sales recorded in Q1 2026.
Yields have remained relatively stable overall, with slight outward movement observed in some prime assets as interest rate expectations shifted. Super prime yields are currently around 5.6%, with broader prime and secondary assets sitting above this level depending on asset quality and lease profile.
More broadly, 2025 saw approximately $2.8 billion in industrial transactions across Brisbane, significantly above the long-term average, and this momentum is expected to carry into 2026, supported by strong domestic and offshore capital interest.
Investor demand remains particularly strong for southside infill assets, where limited land availability, strong tenant demand, and ongoing rental growth continue to underpin long-term value.
