The Colliers International Market Indicators Report - Gold Coast/Northern NSW Industrial, compiled by commercial research analyst Isabelle Andrews, found established and central industrial precincts would continue to perform the strongest.

Colliers International Gold Coast Industrial director Pat Cavanagh said the leasing market was being underpinned by demand from businesses opting to rent rather than buy in the current market.

"Businesses are finding it harder to get funding and, so, while in the past they might have looked to own and occupy, they are now viewing leasing as the safer option," he said.

"Particularly, with the strong incentives being offered, which are equating to about a one to two month rent free period, leasing is emerging as the most attractive alternative for these companies.

"While there has been a moderation in leasing transactions and increased vacancy over the last six months, rents are expected to remain stable as a result at about $110/sqm over the coming year.

"Demand is good for the established and central industrial areas such as Molendinar, Southport, Gaven and Labrador, which generally have less stock available and a more sought-after position.

"Incentives are set to increase for secondary properties and locations as landlords try to lure tenants away from these areas."

Ms Andrews said the research showed yields were poised to soften to between 8.5 percent and 10.5 percent over the next 12 months, peaking at an average of about 9.5 percent.

"The majority of assets traded over the last six months have demonstrated yields of between 8 percent and 9 percent, a softening of around 150 basis points from the peak recorded in the second half of 2007," she said.

"There are solid opportunities for those looking to purchase and properties with income growth potential, upfront cash flow and flexibility are attracting the most interest.

"On the other hand, passive investment properties without development ‘upside' and limited capability for providing income in the short term are generally receiving little enquiry."

Ms Andrews said, in recent months, there had been increased enquiry and activity in the sub $5million market, particularly for properties priced below $2million.

"Cashed up buyers have realised there are good opportunities in this market to purchase high quality assets that wouldn't normally become available, or if they did would be highly contested, and as a result we're seeing private investors returning to the market," she said.

"There is also a feeling we're at the bottom of the market and that is further motivating investors to get in now before prices and competition increase.

"New land tax laws have made industrial premises more attractive to investors, as owners can now pass on land tax charges to tenants and, on the back of Federal Government changes to superannuation incentives, we're also seeing greater activity from superannuation funds."

Mr Cavanagh said the Gold Coast and Northern NSW industrial markets would continue to be driven by the fundamentals.

"These will only be strengthened by the sheer amount of construction planned for the region," he said.

"For example, the Queensland Government alone is committed to about $17 billion of major projects in south-east Queensland in the current year and a further $80 billion is in the pipeline for the region over the next 18 years.

"When coupled with other factors like ongoing population growth, low interest rates and a turn around in the share market, the outlook for industrial property on the Gold Coast is quite strong."

Yatala Enterprise Area, the northern Gold Coast precinct (including Oxenford, Coomera and Gold Coast Marine Precinct) and Northern NSW will continue to be the major growth areas for industrial property in the region.

On the Gold Coast, about 217,000sqm of new industrial projects are either underway or in the pipeline across 49 projects, largely centred on the Yatala Enterprise Area and M1 corridor.

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