Booming demand for industrial premises in Melbourne’s west has led one commercial property agency to proclaim that the vacancy rate has dropped to “the lowest it’s ever been”.
CBRE said in a statement that just over 105,000sqm of industrial space was leased within just a 30-day period, with businesses taking new premises across the Laverton North, Sunshine and Truganina areas.
This included Hitachi taking a long-term lease of an 11,790sqm distribution centre in Banfield Court, Truganina, at a net cost of $80 per square metre.
Meanwhile, the agency said that HB Commerce has leased a 30,885sqm combined office and warehouse in Maker Place in the same suburb for a three-year term, and that Austpac Transport & Logistics leased a 24,662sqm property in William Angliss Drive at Laverton North.
“Industrial vacancy in the west is now the lowest it’s ever been, with current vacancy levels hovering at 1.7 per cent — reflecting just 232,000sqm of stock in the market,” said CBRE’s Todd Grima.
“The recent spate of transactions has been driven by several factors, including rapid growth in the e-commerce sector, occupiers being pushed out of the fringe by redevelopment and increased rents and population growth driving increased demand for goods.”
Tom Hayes, another agent at CBRE, said the tightening in vacancy rates is having upward press on rents.
“Industrial rents have increased by between $3 and $5 per square metre over the past 18 months, further amplifying competition for the limited stock available,” he said.
According to Mr Hayes, there is new supply in the pipeline within the popular warehouse precincts, driven by the strong demand for premises, but that even this new supply is rapidly being accounted for.
“Institutions and large privates [are] continuing to speculatively develop, with 212,633sqm due for completion in the next six months,” he said.
“Of this, around 74,748sqm is already committed and an additional 54,870sqm is under heads of agreement.”
Real estate agents from the same firm said last month that damaging storms over summer had also spurred a “leasing frenzy” in parts of Sydney, particularly from auto repairers in need of extra space to accommodate an influx of hail damage repairs.
This latest experience in Melbourne is in line with predictions by another commercial agency, Knight Frank, which said in March that Australian industrial properties were set to see the strongest increase in rents this year of any property type.
“Despite slower economic growth in the second half of 2018, the outlook for commercial property remains robust, underpinned by sustained tenant demand,” Knight Frank Australia’s Ben Burston said at the time.
“As the year progresses, we expect the market to undergo a transition from yield compression to rental growth as the primary driver of performance, and this shift will see the office and industrial sectors deliver another year of strong returns due to ongoing supply shortages.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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