The Melbourne industrial market is continuing to generate strong interest from local and overseas investors, according to the latest research from CBRE.
CBRE’s Q2 2016 Industrial MarketView reveals the June quarter saw an increase over the March quarter of 76% across the Victorian market. A total of $500 million + transacted including 810-848 Koorait Creek Road in Altona North for $40 million, 26-38 Harcourt Road in Altona for $27.5 million and the Alex Fraser Portfolio for circa $44 million.
CBRE Regional Director, Industrial & Logistics - Capital Markets, Chris O’Brien said there are a number of larger assets on the market which are receiving interest from several offshore groups, with volumes forecast to increase over Q3.
“We are also seeing increased activity in secondary assets, which offer more attractive returns, notwithstanding banks tightening lending criteria,” Mr O’Brien said.
Prime yields remain unchanged over the quarter, suggesting that they are nearing the peak of the cycle.
In the leasing market, activity across Victoria has been consistent with 2015, with the volume of YTD leasing transactions at a comparable level with 2015 and well above transaction volumes of 2014.
CBRE Victorian Director, Industrial & Logistics, Dean Hunt, said that just over 166,000sqm of leasing transactions was recorded in Q2, up 99% from Q1.
“The highest turnover has been in the 6,000 - 12,000 sqm category, with reasonable demand for 14,000+ sqm buildings, particularly in the western market,” Mr Hunt said.
“Demand for serviced land allotments has been strong, impacting availability of suitable serviced land parcels. Significant un-serviced, and in some cases un-zoned land, exists within the urban growth boundary across the northern and western markets to manage future supply and demand.”
According to the report, after two years of high levels of industrial supply, which has placed downward pressure on rents, 2016 will see a reduction in total new floorspace on the market.
“The pre-lease market continues to be aggressive, along with the reduction of historical vacancy, which are strong fundamentals for the leasing market. We have experienced a reduction in the volume of speculative developments, which is assisting in managing vacancy along with natural expiry. Of the current vacancy, the majority of the buildings (425,000 sqm) would be classified as secondary, with the average size vacancy being in the 6,000 – 10,000 sqm size range,” Mr Hunt concluded.
For Australian/international news or global stories, follow us on Twitter.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.