In 2020, Industrial & Logistics was the only sector to record an increase in sales volumes in Australia (+13%), as activity dipped across the office, retail and hotel asset classes. CBRE Fergus Pragnell said “Over the past four weeks, our team has completed nine leasing deals for warehouse properties sub 5,000sqm – demonstrating the strength in tenant demand from a variety of industries, including logistics, food and automotive parts.”

Strengthening business confidence has sparked a spate of recent industrial leasing deals in Melbourne’s western corridor – amassing almost 20,000sqm over nine transactions in a four week period.

CBRE’s Fergus Pragnell said off the the back of a sluggish year of leasing activity for buildings sub-5,000sqm, industrial occupiers had displayed renewed confidence throughout the first quarter of 2021.

“Many companies sat on their hands to see how the economy would react after the 2020 recession, resulting in a backlog of pent-up demand for larger facilities in Melbourne’s west,” Mr Pragnell said.

“Over the past four weeks, our team has completed nine leasing deals for warehouse properties sub 5,000sqm – demonstrating the strength in tenant demand from a variety of industries, including logistics, food and automotive parts.”

Ricardo Cappelletti, also of CBRE, said the recent leasing activity, coupled with strong owner occupier demand, had continued to push up both rental prices and land values.

“After a prolonged period of limited rental growth in the market over the past few years, we’re now starting to see consistent lease rates of more than $90 per square metre for industrial buildings over 500sqm,” Mr Cappelletti explained.

Highlighting the recent spike in leasing activity, CBRE has completed four lease transactions in Truganina.

• AAD Group – a publicly listed supplier of automative parts – has leased a 2,616sqm facility for five years at 62 Saintly Drive to accommodate its new West Melbourne branch. The rental is $220,000 pa (net). 
• An international logistics and freight forwarding company – has tripled its Melbourne footprint after leasing a 2,313sqm property at 34 Bonview Circuit. The rental is $200,000 pa (net). 
• Also at 38 Bonview Circuit, Colab Facades has leased a 2,294sqm property for five years. The company, which has quadrupled its building footprint over the past three years, will pay $200,000 pa (net).
• Still in Truganina, onlne fashion retailer ‘That’s so Fetch’, has signed a five-year lease (plus options) on a 1,652sqm property at 33 Niton Drive. The rental is $157,000 pa (net).

Other recent transactions in Melbourne’s west include a 2,335sqm warehouse property at 10 Eucumbene Drive, Ravenhall, leased to a tenant specialising in automotive automation, for five years. The rental is $185,000 pa (net).

Meanwhile, in Laverton North, Abbin Engineeering, has relocated to a 2,660sqm warehouse facility with existing overhead cranes at 11 Westside Drive. The rental is $250,000 pa (net) over five years.

Also in Laverton North, a specialist importer of Asian foods - has leased a 4,500sqm warehouse property at 145 Fitzgerald Street for three years. The property, which will be utilised as overflow storage for the tenant’s nearby distribution facility, was leased for $315,000pa.

In Sunshine West, Flamestop Australia will open its 15th Australian branch – and first in Melbourne’s West – at 558 Somerville Road. The 1,445sqm facility was signed on a three-year lease for $125,000 pa (net).

Finally, in Altona, All Star Access Hire will lease a 1,750sqm warehouse at 5-15 Drake Boulevard for five years (plus options). The property, located on a 11,000sqm site, was leased for $315,000 pa (net).

The wave of recent leasing activity coincides with recent CBRE Research underlining the heightened investment focus on Australia’s Industralia & Logistics market.

CBRE’s new Investor Intentions survey highlighted that 69% of Australian respondents expect to be more acquisitive in 2021 relative to last year, with Industrial & Logistics assets at the top of their buy list.

In 2020, Industrial & Logistics was the only sector to record an increase in sales volumes in Australia (+13%), as activity dipped across the office, retail and hotel asset classes.

The Investor Intentions findings are highlighted in CBRE’s newly issued Australia Capital Markets – Market Outlook report, which highlights that the Industrial & Logistics sector is expected to be a key beneficiary of a bounce-back in investor demand.