Exceptional 12 months with Strong Demand Across Most Asset Classes
The financial year closed at the same fast pace it commenced buoyed by increasing activity from investors, owner occupiers and tenants alike. The demand for Melbourne’s Eastern corridor continues to expand primarily driven by connectivity and quality development.
Successful businesses supported by a strong localised workforce seemed comfortable to secure their future by committing to a record volume of both purchasers and leases over the term.
896 transactions represents an exceptionally active period. The 50/50 split between sales and leases indicates a strong buying market.
Sub 600m2 factories continued in popularity accounting for 60-70% of all sale/lease transactions respectively. This was not unexpected and has driven square metre growth by approximately 10% annually within this band.
As predicted yields compressed pushing closer to 6%. Investment volume was good however we find ourselves limited on the supply side.
So What’s Next?
- Popularity of Cranbourne and Clyde to continue, underpinned by a large volume of land sales settling in 2018. This corridor is set to go from strength to strength. Larger residential growth should provide a solid foundation to absorb industrial/commercial development.
- Eastlink to flourish. Growth in rental rates are expected particularly in those suburbs abutting Eastlink. Demand continues to outstrip supply as vacant developable land proves hard to source.
- The pipeline of smaller factory unit projects seem healthy which will allow small/medium business to own their own asset over the next 12-24 months. Square metre rates will probably remain steady in this space whilst supply stays strong. Thought should be given to 1,000m2 – 3,000m2 projects as these look to become scarce.
The information provided is only a very broad snapshot and our comprehensive data allows a much more detailed analysis of your project/situation as required.
All metrics point to a positive 12 months ahead and as always we welcome your call to assist where possible.
Now’s the time to act.