Industrial Property Update - August 2022

Posted on 17 August 2022 by Rodney King

Melbourne Industrial Property Update - August 2022

The Melbourne industrial market continues to go from strength to strength. Australia has the lowest industrial vacancy rates globally and in Victoria, we are experiencing the lowest vacancy rates in history.

Demand is predicted to outstrip supply for the foreseeable future and this is leading to growth in both industrial property values and lease rates.

Industrial property values have surged in recent years, as institutional investors have competed for prime assets amid record low vacancy rates fuelled by e-commerce and onshoring booms.

Demand for industrial property from both owner occupiers and investors is at an all time high with an extremely limited supply

“We have not seen real rental growth for years, but in the last 18 months there has been strong rental growth, because of very high occupancy rates”, said Rodney King director of Aston Commercial.

“Unlike other asset classes, industrial or logistics properties are achieving strong rental growth, which meant they are well positioned to weather the storm.”

“Every time we put an industrial property to market, either for sale or lease, we are inundated with enquiries. We have sold many properties at auction for 20% - 40% over reserve with multiple parties competing for these assets and are achieving record building and land rates.”

“We are also leasing properties within days of putting them to market, often receiving multiple applications. Our extensive database of active buyers and tenants have allowed us to transact properties off market. This is because they have often recently missed out on another property."

“The incentives provided by landlords have also come down, in previous years tenants would expect a month rent free for each year of the initial lease term, but now there might be little to no incentives required. Likewise lease terms are now averaging 3-7 years plus options.”

Rodney King,