This was published 7 years ago
Industrial players jostle for land
By Nicole Lindsay
The price of industrial land in Melbourne's fringe suburbs has surged up to 20 per cent in some areas as the supply of ready-to-develop lots dries up.
Research from Savills Australia shows the average price of small industrial land parcels rose 19.6 per cent in the east and 17.6 in the south-east as demand grew but space remained scarce.
This warehouse at 31 Essex Street, Pascoe Vale, has been leased to the Circus Spot and Acrobatics studio.Credit: Bruce Hedge
Savills associate director Monica Mondkar said: "Further rises are anticipated as the site availability is not expected to improve significantly in the near term and demand is rising.
"We expect supply to be further constrained as an increasing amount of industrial land is rezoned for residential and commercial purposes."
The 2016 census revealed the population of Greater Melbourne had increased 25.6 per cent since 2001. During that period 1801 hectares of industrial land was rezoned - 28 per cent for residential use, 21 per cent for commercial and 15 per cent for transport, she said.
Last year 552,447 square metres of industrial space (over 5000 square metres in size) was built but two-thirds of this year's forecast 751,960 square metre pipeline is yet to even start construction.
Ms Mondkar said the smaller end of the market was most active as developers and owner-occupiers competed for land to build their own premises or strata properties for sale.
The greatest increase in land values was going on at the sub-5000 square metre level on estates close to key road infrastructure.
Savills director David Kalb said land in the east which sold in June 2016 for $255 a square metre is now worth around $305 a square metre.
"Industrial developers and owner-occupiers could pay up to $425 a square metre in a fast diminishing land supply market," he said.
Colliers industrial director Tony Iuliano said just two allotments bigger than one hectare are available for purchase – one on the Pellicano Group's Innovation Park in Dandenong South and the other on CIP's The Link Estate in Keysborough.
"This small-lot lands sales market remains one of the hottest in Australia and developers are focusing on infill sites to satisfy the ongoing demand," he said.
Meanwhile, the uses of city fringe industrial property have evolved, with recreational businesses, such as gyms and rock climbing facilities, taking up the space.
CBRE agent Guy Naselli said the changing social demographics created by the suburban apartment boom were driving the trend.
A gym operator has taken over a 250-square metre space at Rocklea Drive in Port Melbourne previously occupied by television antenna installer Mr Antenna, paying $180 a square metre.
In Richmond, a rock climbing outfit is moving into 1250 square metres of space on Baker Street that was formerly occupied by a family-run auto-electrician business.