Undersupply of industrial property signals a turnaround in Mackay's commercial market
The 6.6ha block in Paget was bought by a south-east Queensland business. Photo: Supplied

Undersupply of industrial property signals a turnaround in Mackay's commercial market

An undersupply of industrial properties in Mackay is a sign that the sector has finally turned a corner after years in the doldrums, experts say.

The lack of established industrial assets in the region means that vacant land has been driving the recovery, with land prices firming and sales increasing, according to local agents.

“People have little choice. They just have to go to vacant land and develop their own,” said Knight Frank Mackay senior consultant Mark Kelly.

The industrial property sector’s recovery has been underway since late last year, with a number of multimillion-dollar sales, one of which was a large englobo site in Paget.

The 6.63-hectare parcel of industrial land at 235 Connors Road in Paget was bought by a South East Queensland business looking to establish a base in Mackay.

“It did sell on the day of auction, which always is a strong result when that happens,” said Mr Kelly, who declined to give the result.

mackayindustrial
The Mackay industrial market has turned the corner after several years in the doldrums. Photo: Supplied

“There’s definitely a bit of uplift there. I’m in the process of formatting an offer on another site that’s close to five hectares.

“We just haven’t seen a lot of this action in these land areas over the past few years. It’s more been smaller lots.”

Mr Kelly said another land sale at 2 Empire Street, in Paget, further showed the industrial market was firming off the back of an improving resources sector.

“We are an established hub for mining servicing here. We have an advanced industrial area in Paget, where there are a lot of high-end facilities in the area,” he said.

“There is definitely a positive upside to it when you have land areas like this one selling.”

Herron Todd White Mackay Valuer Greg Williams said while the recovery was in its early stages, solid results for industrial properties had been recorded for the best part of a year.

Southern buyers had been active in the region, keen on securing 10-year leases as well as 8 per cent yields on some of the listings, he said.

“There are some yield chasers around, who I’m quite certain are looking at properties in metro areas first and then casting their eyes further afield to the bigger regions,” Mr Williams said.

“With a 10-year lease term to a fairly solid tenant, it probably wouldn’t matter if it was in Mackay, Townsville or Toowoomba because the income is stitched up for 10 years.”

Mr Williams said the sale of 235 Connors Road was the largest vacant industrial land site in Mackay since about 2014.

The mining downturn had depressed sales and values for a number of years, so the sale was another sign of a “slow-burn” recovery, he said.

“It created a lot of interest in the market in terms of pegging where values are and where the demand is at for that type of asset,” he said.

Prices for vacant industrial land had increased from about $110 per square metre to $130 per square metre over the past year, he said.

“The values are recovering for vacant industrial allotments in Paget at the moment,” he said.

“There’s a bit more interest around, and the market is being traded more frequently for vacant industrial sites.”

Get a weekly roundup of the latest news from Commercial Real Estate, delivered straight to your inbox!

By signing up, you agree to Domain’s Privacy Policy and Conditions of Use. You may opt out at any time.