Rents are forecast to jump 13 per cent this year for certain Melbourne properties
Industrial and warehousing land around the Fisherman’s Bend precinct has been growing more valuable over the years.
Rents in Melbourne’s industrial precincts have soared 22-24 per cent in the past year and are forecast to surge as much as 13 per cent more this year.
And with vacancy rates for some aspects of the industrial sector as low as 1 per cent, rising rents are expected to impact online shoppers.
After high demand in 2022 fuelled by a boom in e-commerce, organisations that often support online shopping including transport, postal and warehouse operators have accounted for 71 per cent of leases in the city’s warehousing hubs so far in 2023.
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One of the nation’s biggest commercial real estate groups, CBRE, recorded last year’s spike and observed that retailers were the second most prolific tenants in the first quarter of this year.
The firm’s head of industrial and logistics research Sass J-Baleh said most of this year’s leasing activity had been centred on getting ahead of an e-commerce boom expected across the coming five years.
Industrial warehouse space is expected to be in increasingly high demand.
“We are really seeing that a lot of these operators are setting up for long-term growth,” Ms J-Baleh said.
While rising interest rates and cost of living have begun to hit online shopping sales, the demand for space to respond to future requirements has also absorbed 72 per cent of the best planned warehousing space for the sector before it is built.
Ms J-Baleh said this was forcing rents up and that while industrial space in Melbourne was more affordable than in other capitals around the country, there would be flow on effects for consumers shopping online.
“Some retailers have a minimum threshold for free delivery, so that might go from $100 to $150,” Ms J-Baleh said.
Online shopping is expected to grow over the next five years.
She added that with Melbourne’s surging population predicted to overtake Sydney’s in the next decade demand for e-commerce was expected to grow.
However it is the NSW capital that is currently supporting the biggest increases in rental costs, with the cost of renting the best warehouse spaces there having risen 38.1 per cent in the past year.
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