Bruno Grollo gets $17.5m windfall for Preston derelict site amid industrial boom
10-18 Chifley Drive, Preston, has sold for a hefty $17.5m.
Melbourne’s growing demand for home-delivered everything has helped Bruno Grollo to a $17.5m windfall for a derelict Preston property.
It comes as a major real estate firm has estimated industrial sector investment across Australia will top $14bn in 2021, beating a 2019 high by $6bn.
The 1.91ha site at 10-18 Chifley Drive had been expected to sell for $14m, with the construction industry icon having purchased it about 50 years ago.
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But it sold for far more as 14 buyers made offers for the industrial zoned site littered with debris.
The buyer is a developer who is expected to pursue a multi-unit industrial project at the property.
CBRE’s Bryce Pane said there had been three buyers up around the $17m mark, with others who pursued it including owner occupiers and investors.
The property is in an industrial hub about 7km from Melbourne’s CBD.
Despite the property being an unimproved patch of dirt that had just been used to support Grollo family construction work in the past, the huge range of offers shows demand for potential distribution sites for e-commerce is at a high.
Mr Pane said the demand for industrial infill sites in suburban areas was only likely to rise.
“These larger landholdings are becoming harder and harder to find,” Mr Pane said.
“Especially for last-mile sites. And with that supply of industrial land shrinking there will be high levels of competition for these sites.
“And we are starting to see rental growth and that will help developers put more into their purchases.”
Killen Thomas’ John Camilleri said demand for the site had been “unbelievably” strong, attracting a number of high-net-worth Melbourne families looking at it as an investment.
While it had ultimately sold to a developer, the interest had largely been about the possibility of installing “high-scale distribution centres”.
The near neighbourhood also includes major shopping destinations around Northland Shopping Centre.
“That’s why industrial, inner-city property is really highly sought after,” Mr Camilleri said.
Prior to the sale, Mr Camilleri had estimated it could cost up to $50m for a developer to make the most of the property.
A recent report from Knight Frank revealed the e-commerce boom buoyed by locked down Australians shopping online had driven industrial sector investment to $14bn in 2021 — smashing the $8bn pre-Covid-19 high water mark set in 2019.
Knight Frank head of industrial research Katy Dean said they expected the trend to grow in 2022.
“Record volumes of investment capital continue to flow into the industrial sector too, with investors also pushing up prices through acquisition and development activity,” Ms Dean said.
“This demand has created powerful tailwinds in the third quarter, resulting in further contraction of vacant space and the return of rental growth rates of 1-2 per cent over the quarter in most markets.”
Warehouse and distribution centres are in high demand across Melbourne.
The highest demand for transport and warehousing in Melbourne has been in the city’s north and west.
Development buoyed by that demand is expected to add 1.17sq km of industrial space to the city this year, and another 1.32sq km in 2022.
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