0411 707 410
If you own a commercial investment property in the Northern Corridor then chances are you’ve had a pretty good few years of equity growth since COVID.
Overall property values have increased on average by more than 30%.
Rental growth has been strong and the influx of people and infrastructure projects has seen consistent demand from tenants in most asset classes.
There is always a price to pay, and it appears this time the price will be Land Tax.
Land tax is calculated using an average of your property’s last three unimproved land values, as determined by the State Government. The latest round of valuations was completed in late 2023 and has resulted in jumps of up to 120% in values across all major Northern Corridor business parks.
1. Small Freehold Industrial: All commercial property owners will be impacted but owners and tenants of smaller freehold industrial properties will feel this the most. Unimproved land values for these properties have typically hovered around the threshold ($350,000 for a company), so they have either been exempt or incurred very little tax. Larger properties will still experience hefty dollar increases in land tax, but the percentage increase will be lower.
2. Industrial Investors with Gross Leases: Land tax is a recoverable outgoing for industrial tenancies but owners who self-manage often negotiate gross leases with a lump sum rental that includes outgoings. From July onwards, the average land tax bill for a 1,000m2 building on a half acre will be close to $10m2 and an owner’s ability to recover this expense could impact the value of their property by $160,000!
3. Business owners: Regardless of if they lease or own, business owners will need to be prepared to weather this increase. We should all be conscious of how this will impact the true cost of running a business in 2024, when we factor in recent CPI, construction cost of new buildings and the continuing increase in business labour costs.
We don’t believe we have seen the peak of this impact for Northern Corridor properties. While the valuation increases have been significant, there’s an argument that they still lag behind the true value of vacant industrial land. With our agents now consistently achieving land sales over $600m2 in almost all precincts, the next round of land tax valuations are likely to add further pain.
This impact could be reduced if the Government adjusted the exemption thresholds ($350,000 for companies & $600,000 for individuals), but they have not done this since 2007 and there is no indication they have appetite to do so now. Earlier this year, Deputy Premier and Treasurer Cameron Dick said Queensland had one of the most generous land tax thresholds in the country, saying “Queensland collects less than half as much in land tax per capita as New South Wales or Victoria. This revenue funds the frontline”.
Queensland’s mid-year budget showed the state government made $1.73 billion from land tax in 2022-23, which was a $99 million increase from 2021-22. This is tipped to grow even further this financial year to $2.03 billion, and then reach $2.32 billion by 2024-25.
All you can do is be conscious of Land Tax whenever you are dealing with a commercial property decision. If you have a lease negotiation coming up in the next year you should talk to our team to make sure your lease structure does not cost you money in the long run. If you plan on buying another property you should be conscious of the land tax thresholds for each of your entities before choosing what name to put on the contract.
Let’s explore what it means for you if you own a half- acre freehold industrial block in Brendale in a company name with a warehouse or units. Standard site coverage for industrial is 50%, so let’s assume you have a 1,000m2 building on 2,000m2 of land.
Land Valuation (Average of last 3)
Your Land Tax Estimate $5,247 $7,853 $10,454
*Assumes 5% increase at next review in 2025.
Unimproved land values in Brendale Business Park increased on average from $315m2 to $490m2 in this last round. With sale rates now being achieved north of $700m2 in the region, it is likely that the next round of valuations in two years’ time will see further increases. Negotiating nett lease terms will be critical for investors in this precinct in particular.
Your land tax bill could go from $5,247 to $10,454 (within 3 years)
Impact on your tenant outgoings $5.21m2 (if recoverable)
Impact on your investment value -$80,118 (if not recoverable)
Every owner’s situation is different so contact our team today to better understand how this impacts your particular property.
SOLD OFF-MARKET $850,000
6&7/3 MOONBI STREET, BRENDALE
• 304m2* NLA
• 1 x roller door
• Good signage opportunities
• On site parking
SOLD $1,560,000
• 505m2* NLA situated on a 1,375m2* allotment comprising of open plan warehouse with small office
• 3 phase power / 32 amp
• 5 x high clearance roller doors
• Easy access
• Ample parking with container set down area
Aaron 0447 744 948 | Griffin 0422 587 143 Trevor Nelson-Jones | 0407 736 521
SOLD $450,000
9/349-351 MACDONNELL ROAD, CLONTARF
• 140m2* warehouse/office space comprising of 105m2* warehouse/reception and 35m2* first floor office
• Ground floor office/reception area
• 2 x private air conditioned offices on the first floor
• 1 x electric container height roller door
• Ground floor amenities and kitchenette
Aaron Canavan | 0447 744 948
SOLD $650,000
8/40 TERRENCE ROAD, BRENDALE
• 179m2* clear span warehouse
• Container height roller door
• Internal amenities including bathroom & kitchenette
• 3 phase power
• Glass door entry
• Month to month tenancy currently in place
Aaron 0447 744 948 | Griffin 0422 587 143
WE’RE HERE TO HELP YOU MAKE BETTER COMMERCIAL PROPERTY DECISIONS, SO REACH OUT TO OUR TEAM TODAY TO DISCUSS YOUR SPECIFIC SITUATION.
LEASED $30,000
9/40 TERRENCE ROAD, BRENDALE
• 168m2* total floor area
• Full height roller door
• On site car parking
• Internal amenities
• 3 phase power
• LED lighting
Griffin Deakin | 0422 587 143
LEASED $45,000
• 131m2* ground floor retail site
• Currently fit out as a bar/brewery space
• Excellent exposure & signage to Gympie Rd
• Excellent on site parking
• Side access to premises via large roller door
• Disabled access bathroom within tenancy
• Bonus alfresco area at the front of the property
Griffin Deakin | 0422 587 143
LEASED $318,945
• 1,933m2* tilt panel warehouse comprised of 1,563m2* warehouse, 312m2* office & 58m2* mezzanine storage
• Minimum internal height of 8m*
• Large hardstand area for truck accessibility
• Two full height electric roller doors
• 3 phase power throughout
Griffin 0422 587 143 | Aaron 0447 744 948
LEASED $75,120
• 469.5m2* NLA
• Tilt panel construction
• Electric roller door
• 3 phase power
• Semi-trailer access
• Ample parking
Griffin 0422 587 143 | Aaron 0447 744 948
