Melbourne industrial land booms by 23%
If you own industrial land in Melbourne, you’ve been a big winner in the past year.
Values for developable industrial land in the Victorian capital have grown 22.8% over the past 12 months – the highest rate nationally and trumping almost every other major commercial asset classes by some margin, according to research from CBRE.
The agency’s Q1 Australia Industrial and Logistics MarketView says industrial land lots grew even more than that in certain parts of the city.
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According to the research, 1.6ha lot land value rises were the highest in Melbourne’s east, growing by an average of 35.5% year on year to $525 per square metre, while in the west there was an average of 25% growth to $238 per square metre.
CBRE Head of Logistics and Retail Research, Kate Bailey, says Melbourne’s west continues to boom and has now outstripped the north for price.
“Historically, Melbourne’s west has provided the cheapest industrial land in Melbourne, 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% year-on-year to $220 per square metre,” Bailey says.
“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% year-on-year to $1050 per square metre.”
Melbourne’s south-east has also enjoyed typically strong growth in what is a manufacturing heartland, with 16.6% growth over the the 12 months to an average of $438 per square metre.
Highlighting the premiums buyers and investors are prepared to pay, a property at 508 Wellington Rd, Mulgrave sold for $15.5 million December 2016, and then sold again in September 2018 for $30.5 million – almost double – without any new value being added to the site.
Demand has also seen rents increase by as much as 7.4%.
“In tightly held precincts such as the south-east, a lack of land is driving demand for secondary markets such as Cranbourne West and Pakenham,” adds James Jorgensen, CBRE’s new head of its Victorian industrial team.
