Melbourne Industrial Sector Stays Strong

Melbourne’s industrial sector has remained the strongest of the nation’s three largest markets, data has revealed.

According to the report from JLL for the third quarter of this year, the Victorian capital’s sector not only has the most capacity at 29.7 million square metres, but also the lowest vacancy rate at 3.12 per cent.

The data, which covers Australia’s three largest markets, Greater Sydney, Melbourne and Brisbane, revealed a slight uptick to a 3.95 per cent vacancy for Sydney’s 23.1 million square metre market, which JLL said “showcases resilience and adaptability”.

And Brisbane’s 13.6 million square metres with a 3.67 per cent vacancy rate signalled robust growth potential driven by strong population trends, the report said.

JLL head of Strategic Research, Australia, Annabel McFarlane, said industrial vacancy had edged up in most Melbourne and Sydney precincts during the quarter as mixed demand results were outweighed by well above average volumes of new stock delivery.

“South-east Melbourne is the only precinct of scale to record declining vacancy during the quarter,” McFarlane said.

“This precinct totals close to 11 million square metres but with just 1.6 per cent vacancy, options for occupiers remain limited.”

Meanwhile, Australasian real estate funds manager Centuria Capital Group has acquired a $21.9-million dual-tenant warehouse facility in a prime industrial precinct 11km north-west of Adelaide’s CBD.

▲ Centuria has acquired the asset at Royal Park in SA from Centennial.

Secured as a third asset for its wholesale unlisted fund, Centuria Select Opportunities Fund, the property at 7 Brandwood Street, Royal Park, was acquired from Centennial.

It provided a value-add opportunity for wholesale investors after being secured significantly below estimated replacement cost, Centuria said.

“With current rental values substantially below market rents, there is further opportunity for positive rent reversions in the medium term,” it said.

Centennial executive director Paul Ford said the Royal Park site had “sat vacant for many years before we acquired it in 2021”.

“Its location and functional yet dated existing improvements enabled us to refurbish the facility, achieve strong environmental credentials via our Regen strategy and fully lease it prior to works being completed.”