Melbourne’s Industrial Land Booms 22.8pc

Melbourne’s industrial land values are up 22.8 per cent over the past year, reflecting the highest rate of growth across Australia.

The land value rises were highest in Melbourne’s east and west for 1.6 hectare lots, growing by 35.5 per cent and 25 per cent year-on-year respectively to $525/sq m and $238/sq metres, according to CBRE’s Australia Industrial and Logistics Market View.

Melbourne’s West has traditionally provided the cheapest industrial land in Melbourne, explains CBRE head of logistics and retail research Kate Bailey.

“However demand for affordable rents has driven land values in the west to be more expensive than the north, where 1.6ha lot land values have risen 6 per cent year-on-year to $220sq m,” Bailey said.

“Elsewhere, the growing importance of accessibility to ports and customer bases is driving growth in inner Melbourne, where 1.6ha lot land values surged by 23.5 per cent year-on-year to $1,050 per sq m.”

In comparison to Melbourne's red hot growth in the industrial market, land values across the country recorded growth with average prices per sq m for 1.6-hectare parcels up 5.3 per cent year-on-year.

Related: Charter Hall Fund Joins Logistics Shopping Spree In Melbourne’s West

Bailey said investors remain willing to pay a premium for industrial land.

Melbourne’s south east also recorded solid growth in land values of 16.8 per cent year-on-year to $438 per square metre, demonstrated by 508 Wellington Road in Mulgrave changing hands late last year.

Bailey says the Mulgrave property transacted for $15.5 million in December 2016 and again for $30.5 million in September last year — without any value added to the property.

Melbourne industrial super prime net face rents also continue to see an uplift, recording growth at the second highest rate across the country.

“With the increase of 7.4 per cent year-on-year, reflective of continued demand for well-located industrial space in areas with low land and stock availability,” Bailey said.

“The growth was largely driven by the East and North precincts with increases of 3.7 per cent to $105/sq m and 3 per cent to $85 per sq m respectively.”