Townsville's industrial relevance and Capital of North Queensland status is set to experience testing times over the next decade as the average vacancy rate approaches 30 percent in the City.
In contrast, the Cairns economy continues to see positive growth on the back of growing demand for agricultural products and international tourism experiences.
The City's business sector more broadly is seeing mixed activity with business confidence and job advertisements increasing while employment prospects continue to decrease.
Employment in the industrial sector of mining and construction has been impacted more than any other sector of the market.
The industrial sectors' contribution to Townsville's Gross Domestic Product (GDP) has reduced as a proportion to the total economic contribution of the region.
And therefore it begs the question about the relevance and future prospects for the industrial real estate market in Townsville and the City's claim to the symbolic title of being the capital of North Queensland.
As the Herron Todd White Property Update for November 2016 reports, the job advertisements and business confidence is showing positive indications. But the all important unemployment rate is still unfavourable at 12 percent.
The actual number of people employed is the most telling economic indicator. On this measure, the trend since early 2011 has continued on negative news of approximately 25,000 workers losing their jobs to November 2016. This has been six years of sustained contraction in labour force wages.
Apart from mining exploration, extraction, processing and the commodity export supply chain, and various light industrial operations, Townsville's industrial and commercial sector has struggled to grow capacity as construction, mining and manufacturing GDP has reduced.
Technology is changing the supply chain's demand for labour and bringing unprecedented transparency on uncompetitive goods and services. This is impacting global industrials like never before. And this too will impact this sector of the Townsville market heavily.
Yet it's the industrial sector and the collaboration with landlords and tenants that will be critical in the next phase of Townsville's industrial relevance because innovation will enable existing products to develop and continue to find profitable markets, while invention will bring increased capacity potential and therefore more capability that will impact employment and GDP overall.
Cairns to the North of Townsville are competing for population and profits growth. Its leaders and commentators makes no bones about that.
Its robust international tourism and goods supply chain readily accessible to Asian markets, solid growth in property values, and a willingness to talk down Townsville's appeal at every opportunity, makes for challenging times for Townsville's property market and legitimacy as the capital of North Queensland.
References:
Herron Todd White Property Market Update November 2016
National Australia Bank Online Retail Sales Index June 2016
Australian Treasury Small Business Key Statistics and Analysis Report 2012
Rapid Realty Australia
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