Market Update July 2018 – June 2019

Steady Market as both Supply and Lending Tighten

The wash up of financial year 2018/2019 was pretty much as predicted in our last market update. The ratio of sales to leasing transactions remained constant as did square metre rates and average prices across both sales and leasing activity.

Most interestingly was the strength and resilience of the South East commercial industrial market as we watched residential retreat and contract aggressively.

Overall volume of 832 transactions for the year was encouraging as deals that traditionally took place almost instantaneously extended out to 3-4 weeks as purchasers got their ducks in a row with financing.

Land sales volumes were limited by supply however appetite remained encouraging as industrial blocks continued to transact at historical high levels.

Yields continue to contract on premium industrial assets as the market searched to park funds in well located premises with good covenants. The latest suite of deals have been done at yield rates closer to 5% than 6%.

The next 12 months seems to be steady as she goes. Growth areas including Cranbourne, Clyde North and Pakenham are attracting considerable interest from developers, purchasers and tenants alike.

What’s Next?
We seem to have hit a happy equilibrium of supply and demand in our ever popular corridor, generally m2 rates should stay consistent throughout the coming financial year.

Yields may compress closer to the 5% mark and we see the potential for leasing rates to rise in Dandenong and along Eastlink as supply tightens. We’re looking forward to the year ahead. Please make
contact so we can supply you with some more information specific to your asset or search.