Industrial Lots in Melbourne Fringe Come to Market

Two sites in a Melbourne-fringe industrial precinct, touted as one of the largest land releases this year, have come to market.

Sandhurst Retail & Logistics has launched an expressions of interest campaign for the lots in its O’Herns Logistics Park at Epping, 18km north of the CBD.

In what it said would be a “tightly contested campaign in the current constrained industrial market”, SRL is offering 4.3ha and 2.18ha parcels, the first to be listed in the 140ha precinct.

SRL said it expected the two lots to top $35 million.

Zoned for Industrial 1(IN1Z), the lots are in the first of nine stages to be developed in the park and situated about 640m from the Hume Freeway diamond interchange.

External works to the estate began last August, with stage 1 to comprise about 7.1ha of built form.

Floorplates in stage 1 are planned to range from 5000sq m  to 30,000sq m. This stage of the precinct will offer around-the-clock operations and environmentally sustainable design (ESD) principles, including solar power, rainwater harvesting and LED lighting, contributing to a targeted 6-Star Green Star design rating.

“O’Herns Logistics Park will provide approximately 147,000sq m of space in the eastern parcel alone,” SRL chief executive Vivek Subramanian said.

“When combining the eastern and western lots, SRL will develop approximately 500,000sq m of office and warehouse space for some of the most renowned occupiers and businesses in the world.

“This will be key to supplying the industry with vital resolutions to the demand for land and supply chain issues impacting the whole of Victoria and Australia.”

Subramanian said the O’Herns Logistics Park supported SRL’s vision to “facilitate ongoing value and opportunities in growth areas”.

“The park will provide much-needed development relief in a highly stressed market, enabling businesses to expand and grow,” he said. 

“This development is also estimated to support up to 4000 employment opportunities throughout the development of the estate and deliver long-term value to future occupiers through its premium connectivity to an expanding transport and infrastructure network.”

He said SRL was targeting some of the world’s largest industrial and household name occupiers with speculative space expected to be available from 2025.

▲ A render of SRL’s O’Herns Logistics Park in Epping, north of the Melbourne CBD.

CBRE’s latest Melbourne Industrial and Logistics Land Supply report highlighted occupier activity in the sector in Victoria has been the strongest in the country for the past three years.

CBRE Australian head of industrial and logistics research Sass J-Baleh said this had been driven by a range of factors, including access to the country’s largest port, the Port of Melbourne; strong population growth; the efficient road infrastructure network; and significant rent cost differential between Melbourne and Australia’s other major eastern seaboard markets.

“Our data highlights that Melbourne’s north has recorded the city’s largest vacancy decline of the past 12 months,” J-Baleh said. 

“The precinct now has Melbourne’s tightest industrial and logistics vacancy rate of just 0.59 per cent, with limited leasing activity given the lack of stock on the market, which is putting major restrictions on business and job growth and a huge strain on the supply chain.”    

CBRE’s Daniel Eramo and Joe Brzezek, alongside Savills’ Daniel De Santis and Mario Moscon, have been appointed to manage the EOI campaign.

They said it was “a rare opportunity to acquire large parcels of industrial and logistics land in Melbourne’s tightly held northern industrial corridor”.

“Land values in Melbourne’s north have increased rapidly over the past 24 months, with most of the acquisition opportunities involving smaller lots of between 1250sq m and 5000 square metres,” Eramo said.

“This has created a gap in the market, with a chronic shortage of medium-to-large allotments, which are in strong demand from both owner-occupiers and institutional owners seeking to accommodate tenants in their portfolios.

“O’Herns Logistic Park also benefits from its core location, as the bulk of the current land supply is situated in Melbourne’s outer north.” 

Expressions of interest in the lots at O’Herns Logistics Park close on June 8 at 4pm.