With limited zoned industrial land left for development in metropolitan Melbourne leading to rising rents and land rates, more and more industrial occupiers are looking for another option - and a great alternative can be found in regional Victoria.

In particular, the growing City of Greater Geelong, which encompasses both Avalon and Geelong itself as well as other industrial suburbs such as Corio and Lara, is becoming increasingly attractive to industrial users, which in turn is attracting investors to the area.

The Avalon precinct is situated just off the Princes Freeway, providing fast and easy access to Melbourne, which is situated around 50 kms to the northeast. 

Geelong is around a further 15 kms south of Avalon, or 65 kms southwest of Melbourne – which is very similar in distance to the Port of Melbourne as Pakenham in Melbourne’s east is or Merrifield in Melbourne’s north.

In between Avalon and Geelong is Corio, while Lara is just beside Avalon.

Avalon, and particularly its airport, is already internationally known, however the wider Avalon, Corio and Geelong industrial precincts have only just started to be nationally recognised as a viable option for users looking for an alternative to more expensive Melbourne industrial suburbs.

Geelong’s affordability is a key drawcard

In areas such as Derrimut and Truganina in Melbourne’s west, land is selling for $800+ per sqm for parcels of 1ha+.

However in Geelong zoned industrial land is still circa $300 to $350 per sqm for several hectares – less than half the price.

Meanwhile, rental rates in Geelong are around 25% to 30% cheaper than in Melbourne’s west, for example, which is just an hour away but where prime rental rates range from $120 to $140 per sqm for properties of 5,000 sqm+, and supply is very limited.

In Melbourne rental and land rates have mostly been rising for several years, but Geelong is yet to catch up. 

In Geelong land values are still being offered at what the West had pre-COVID, with significant growth yet to come, however we believe this will come as demand continues to rise, with more industrial users moving to the area. Indications of the increased attractiveness are beginning to show, with rents in Geelong up 17% this year.

At the moment there is considerably more land supply in the Avalon and Geelong area, which is a growth area of Victoria, than there is in metropolitan Melbourne, which is partly why values and rents have not yet grown as much.

The Greater Avalon Employment Precinct Structure Plan sets out the area located 20 kms northeast of Geelong and 55kms southwest of the Melbourne CBD as a growth area set for land development.

In this area hundreds of hectares of industrial land will come online in the next few years including a 780-hectare, airport-edge city called Greater Avalon next door to the regional airfield, set to be developed by MAB Corporation.

This new Avalon Airport Business Park has already established itself as a state-significant transport hub attracting the likes of major large manufacturing and e-commerce businesses including Australia Post, Pet Stock and major manufacturing jobs with the Australian Defence Force.

Other attractions include infrastructure and a growing local workforce

In addition to affordability, industrial users are being drawn to the terrific infrastructure in the Geelong area.

The city, which is Victoria’s second largest, acts as a passage through to Ballarat, Barwon Heads and Bellarine Peninsula, as well as across to Adelaide and down to Tasmania.

It has linkages to all major and proposed strategic transport hubs including road via the Princes Freeway, air via the Avalon International Airport, rail via the Western Interstate Freight Terminal and sea via the Port of Geelong and the future Port of Melbourne at Avalon.

The creation of a new dynamic airport city precinct, which will attract a range of new businesses and amenity is also attractive for industrial users.

In addition, Geelong is a strong growth area – both in Victoria and Australia – with a rapidly growing population and hence, a growing skilled local workforce for businesses to take advantage of.

Current opportunities in the area

A number of new developments and opportunities for industrial users and investors are now under construction in the Avalon and Geelong area.

Knight Frank is currently marketing Wilmac Corio at 128-146 O’Briens Road, which is being developed by Wilmac and offers the only brand new 1,000 sqm+ warehouses currently for sale in the Greater Geelong market.

We are also marketing 12.59 ha of prime industrial land at Lots 2 and 4, 220 Heales Road in Lara for sale.

Current leasing opportunities include 80 Beach Road in Avalon, where Knight Frank is marketing the HANGAR’s space at Avalon Airport, with 3,500 to 8,500 sqm available over two buildings.

By Joel Davy - Partner, Head of Industrial Logistics, Victoria