Fierce Competition For Industrial Property In Melbourne's North West

Demand for small-to-medium sized industrial facilities is heating up in Melbourne’s continually evolving north-west industrial market.

According to Colliers International’s Ashley McIntyre, the industrial landscape in the north-west region of Melbourne is changing on an almost weekly basis.

“The combination of low interest rates and development of 10 major land estates is feeding the market with A Grade buildings offering prime access to major arterials,” Ms McIntyre said. “These A Grade buildings make up only 32 per cent of vacancies from 3,000sqm to 5,000sqm, showing demand for quality property is on the rise in small-to-medium sized facilities."Ms McIntyre, a specialist in the 1,000-5,000sqm market, said that while owner-occupiers were driving the north-west industrial market at the moment, interest from investors was increasing.

“The majority of our sales are to companies seeking to upgrade their current facilities and they see the north-west as their best option,” she said.

“This market ticks all the boxes around accessibility, staffing requirements and financial overheads.

“That being said, we have noticed an increase in investment sales and enquiry. Residential property prices are still increasing, however rental returns have plateaued. As such the yields available in the industrial space are looking very inviting for those in the know.

“Competition in the western suburbs is fierce at the moment. Ravenhall, Derrimut and Truganina are all currently subject to massive development projects and, with the City of Wyndham population booming, it is showing no signs of slowing down.”

[urbanRelatedPost][/urbanRelatedPost]Ms McIntyre said developers were having to think outside the box when it came to what they were putting on offer.

“With new stock constantly being fed to the market, features that were once considered a bonus, such as three phase power, quality staff amenities and security systems, are now seen as a basic requirement,” she said.

“In order to stay ahead of the game, we have been advising our clients to consider incorporating features such as recessed loading docks or container rated hard stand into their speculative designs, as stock which is well suited to occupiers with a logistics focus is flying out the door.

“Both buyers and lessees are also focussed on hardstand, exposure and either container or truck access. If a 3,000sqm standalone structure with 8,000sqm of heavy duty hardstand, a secure yard and located near major arterials became available today, it could sell or lease in a week. This is the dream industrial property at the moment.”

Ms McIntyre said demand was coming from a range of industries.

“Transport and logistics users are very active in the current market, however we are also fielding strong demand for food-grade facilities with refrigeration and freezer requirements and even companies with a recreational focus such as gymnasiums and various sporting centres,” she said.