Industrial development success in Melbourne’s North

Steel manufacturer Central Steel has secured a new industrial lease at a speculative development in Melbourne’s Northern suburb of Somerton.

Located at 50 – 80 Stanley Drive, Central Steel has secured the 10,301sqm warehouse prior to completion.

Central Steel is relocating from its existing site on Somerton Road as it is being redeveloped by private equity real estate investment firm, Cabot.

CBRE’s Joe Brzezekand Daniel Eramo negotiated the deal on behalf of leading industrial developer and manager ESR Australia.

“Although tenant depth has stabilised over the past six months, Melbourne North’s industrial market has witnessed continued vacancy constraint. The vacancy rate is currently circa 1.12% which has been a factor for the current trend of speculative industrial development success,” Mr Brzezek said.

Rent achieved for the warehouse reflects the continuing rental growth in Melbourne’s North, estimated to have increased 8.7% since Q1 2023 and 35.1% in the past 12 months.”

Mr Eramo added, “Throughout 2023, 64% of all industrial lease transactions in Melbourne’s North above 4,000sqm have been speculative developments, a significant shift from the previous year of 7%. This reflects strong tenant demand providing confidence in the development sector to deliver this type of product.”