Land prices for industrial sites in Melbourne’s west have risen by more than 20% across the past eight months, as more owner occupiers look to put down roots. “Demand for quality industrial land and buildings within infill locations in western Melbourne is soaring to unseen levels,” said CBRE Ricardo Cappelletti. 

Having sat in the $150-$200/sqm range as recently as 2016, prices grew steadily though to August 2020, when the sale of a 6,446sqm lot within Axiom Estate in Truganina set a new record land rate of $385/sqm.

A string of 2021 sales have subsequently raised the bar, with land rates for vacant sites now approaching $600/sqm in the industrial heartland.

The benchmark currently stands at $585/sqm after an owner occupier purchased 4 Delivery Drive in Truganina last month, paying $2.92 million for the 4,987sqm lot within the Connect West Estate.

A shortage of existing built stock is encouraging more owner occupiers to buy land and construct, competing with developers and pushing prices up.

Camping and 4x4 accessory supplier Sun Yee International is a prime example, having purchased a 6,107sqm development site in the Access Altona precinct for $3.46m, a rate of $566/sqm.

The online retailer currently leases 32 Drake Boulevard, Altona, but recently bought 25-29 Drake Boulevard with plans to build a circa-4,000sqm headquarters to accommodate its growing operation.

“Demand for quality industrial land and buildings within infill locations in western Melbourne is soaring to unseen levels,” CBRE’s Ricardo Cappelletti said.

“Sun Yee International’s purchase is indicative of the increased activity we’re seeing from owner occupiers.

“It wanted to move from tenant to owner and, given the lack of suitable stock, Sun Yee International explored a titled land acquisition that would allow it to build and move in line with its lease expiry.”

Mr Cappelletti managed the Drake Boulevard sale with CBRE colleagues Harry Kalaitzis, Tom Murphy and Fergus Pragnell on behalf of the private vendor.

Of a pair of 7,232sqm sites on the same street in Truganina, 40 National Drive sold for $485/sqm ($3.507m) in February and 44 National Drive for $500/sqm ($3.616m) in April. Both were purchased by owner occupiers.

The CBRE agents also managed the $505/sqm sale ($5.446m) of 39 Orbis Drive, Ravenhall, a 10,785sqm property.

In Laverton North, 10,150sqm site with basic warehousing at 9-11 Fitzgerald Road sold for $5.99m, a land price of $591/sqm.

The new owner plans to redevelop the low-site coverage property in the coming years.

“As recently as four or five years ago, prices were sub-$200/sqm, and industrial land was generally sub-divided and sold down,” Mr Cappellitti added.

“Since then, institutional groups have steered away from sub-dividing land for resale, instead largely looking to pre-lease and construct sites for large-scale occupiers.

“Now we’re seeing more and more owner occupiers enter the picture, increasing demand and ultimately prices.”

To request a sales analysis of the above industrial land sales please email the CBRE agents via the below contact form.