Sales set new $375psm benchmark for south-east industrial

Stage 1 of a new Keysborough industrial estate – Interlink Business Park - has sold out within 12 weeks of release with 12 allotments selling for prices up to $375 a square metre, setting a new benchmark for industrial land in Melbourne’s south-east.

According to Savills Notting Hill Office Director, Kosta Filinis, the sales reflect a growing shortage of ready to build land around key transport nodes in the south-east.

“We have sold 12 lots in just under three months at prices not seen before in the south-east market. The previous high was circa $325 whereas every one of these lots has sold for more than $340 with one selling at $375.

“That’s an extraordinary result which reflects the severe shortage of sites, especially those offering flat land and the best access to freeways.”

“There is now an increasing urgency for well-placed development sites based on a growing confidence in the market and prices are now very much reflecting that,” Mr Filinis said.

The 60,000 square metre InterLink estate, offering 843 to 2,998 square metre allotments in Stage 1, is located at 283 Perry Road in a prime industrial precinct between well-established industrial parks - The Key and The Link - which have been hugely popular, attracting numerous high profile tenants including Sealy, Miele, BIC and Rinnai.

Mr Code said the majority of the allotments were purchased by developers and owner occupiers with the close proximity to Eastlink being the key element of most purchases.

“Freeway access remains the key determinant as it can prove a valuable contributor to the bottom line in the very competitive industrial markets,” he said.

Mr Filinis said with less than 10 hectares of serviced industrial land now available within the Keysborough/Dandenong South region, the market would now tighten further as new industrial land releases were not due until the second half of 2017, putting further upward pressure on land values.

“Over the last 12 months, land sales in Keysborough/Dandenong South, have totalled about 55 hectares while the average annual take-up during the past seven years has been 45 to 50 hectares and that has caught estate developers by surprise and resulted in a shortage of available ready-to-build sites.

“What has exacerbated the shortage has been an increase in demand generally and in particular a flight to quality with businesses looking for built-to-order premises,” Mr Filinis said.

He said the opening of the Dandenong Bypass had enhanced what was already a strong transport corridor by easing traffic congestion in the area around the industrial estates, driving even greater demand within the region.

Savills Associate Director Research in Victoria, Monica Mondkar, identified approximately 497,467 square metres of industrial accommodation leased in the south-east in the 12 months to September, a massive 72 percent rise on the previous year of 288,967 square metres, and 80 percent up on the five year average of 276,407 square metres.

The research found industrial land values in the south-east, over the last 12 months, were generally in the $185-$325 a square metre range for lots between 3,000 and 5,000 square metres.