NORTH-WEST INDUSTRIAL RUNNING HOT

Written on the 29 July 2015 by Nick Nichols

NORTH-WEST INDUSTRIAL RUNNING HOT DEMAND for small-to-medium-sized industrial facilities is heating up in Melbourne's north-west industrial market, with owner-occupiers leading the charge.

According to Colliers International's Ashley McIntyre, the industrial landscape in the north-west region of Melbourne is changing on an almost weekly basis.

"The combination of low interest rates and development of 10 major land estates is feeding the market with A-grade buildings offering prime access to major arterials," McIntyre says. "These A-grade buildings make up only 32 per cent of vacancies from 3000sqm to 5000sqm, showing demand for quality property is on the rise in small-to-medium sized facilities."

McIntyre, a specialist in the 1000-5000sqm market, says that while owner-occupiers are driving the north-west industrial market at the moment, interest from investors is increasing.

"The majority of our sales are to companies seeking to upgrade their current facilities and they see the north-west as their best option," she says.

"This market ticks all the boxes around accessibility, staffing requirements and financial overheads.

"That being said, we have noticed an increase in investment sales and enquiry.

"Residential property prices are still increasing, however rental returns have plateaued. As such, the yields available in the industrial space are looking very inviting for those in the know.

"Competition in the western suburbs is fierce at the moment. Ravenhall, Derrimut and Truganina are all currently subject to massive development projects and, with the City of Wyndham population booming, it is showing no signs of slowing down."

McIntyre says developers are having to think outside the box when it comes to what they were putting on offer.

"With new stock constantly being fed to the market, features that were once considered a bonus, such as three-phase power, quality staff amenities and security systems, are now seen as a basic requirement," she says.

"In order to stay ahead of the game, we have been advising our clients to consider incorporating features such as recessed loading docks or container rated hard stand into their speculative designs, as stock which is well suited to occupiers with a logistics focus is flying out the door.

"Both buyers and lessees are also focussed on hardstand, exposure and either container or truck access.

"If a 3000sqm stand-alone structure with 8000sqm of heavy-duty hardstand, a secure yard and located near major arterials became available today, it could sell or lease in a week. This is the dream industrial property at the moment."
McIntyre says demand is coming from a range of industries.

"Transport and logistics users are very active in the current market, however we are also fielding strong demand for food-grade facilities with refrigeration and freezer requirements and even companies with a recreational focus such as gymnasiums and various sporting centres," she says.

Auctions are delivering strong results across the board, with Colliers International achieving an average clearance rate of 84 per cent in the 2014-15 financial year.

"Auction is a fantastic way to make a property stand out from the crowd regardless of size," McIntyre says.

"It shows buyers you are a committed seller and creates competition between buyers, which more often than not leads to strong results for vendors.

"A recent example is 2/758 Princes Highway in Laverton North. After a private sale campaign with little enquiry, we decided to change direction and put the property up for auction.

"The privately-owned, 1226sqm property had a unique layout, featuring a showroom, four roller doors, drive-through access and offered main road exposure.

"Competitive bidding between three parties at auction resulted in the property selling under the hammer for $1.61 million to an investor."

Private sale campaigns were also producing genuine interest and attracting premium prices.

"For example, 463 Somerville Road in Brooklyn a 7694sqm building on 20,000sqm of land attracted immediate interest," says McIntyre.

"The property was sold to a private investor from Sydney for $4.15 million, having been retro-fitted to better suit to transport operators and include a drive-through canopy and a large amount of hardstand at the rear."

 


Author: Nick Nichols

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