Melbourne leads rest of Australia with record industrial & logistics sales turnover: CBRE
Victoria’s industrial & logistics sector posted its strongest year of sales on record in 2016, with $1.92 billion in assets changing hands, an increase of 15% from 2015, according to leading commercial real estate firm CBRE.
The record numbers were helped by Melbourne, which was the strongest performer nationally, according to CBRE’s Industrial and Logistics, Q4 2016, MarketView report.
Both domestic and offshore investors sought out industrial assets in all of Melbourne’s core industrial precincts, with the focus on super core stock or assets that add value/repositioning angles, said CBRE director, Industrial & Logistics – Capital Markets, Rory Hilton.
“2016 was a strong year for offshore investment in Melbourne’s industrial & logistics market – with global capital continuing to seek out opportunities that offer scale and quality in key markets,” Hilton said.
The quarter ended December saw $394 million in property transactions, boosting Victoria’s numbers. New South Wales was second, recording $1.559 billion in transactions during 2016, followed by Queensland with $537.67 million, $617.2 million in Perth, $146.05 million in South Australia and $31.25 million in the ACT.
Nationally, however, total sales of industrial and logistics assets fell to $4.831 billion during 2016 from a record $5.267 billion in 2015, due to the available stock shortfall.
CBRE senior research manager Kate Bailey said Melbourne experienced further yield compression in Q4, moving 10 basis points to 6% – reflecting continued demand for high quality industrial assets.
“This change was driven by yields in Melbourne’s south east region, which saw a 25 basis point compression to 5.8% - the lowest in Melbourne,” Bailey said.
Secondary yields in inner locations are expected to continue compressing as investors look to capitalise on the increasing demand for last mile delivery facilities by refurbishing existing assets.
On the supply front, there was 128,000 sqm of new stock added in Melbourne during the December quarter – down 53% on the same period in 2015.
Despite this, a number of notable developments are proposed, including the Target Distribution Centre in Trugganina and the Greens Road warehouse in Keysborough.
Hilton said Melbourne’s strong industrial leasing market would continue to support investment in the sector.
“Strong levels of pre-leasing and leasing activity in the second half of 2016 are set to flow into the capital markets 2017, underpinning heightened investment in the sector,” Hilton said.
“Top tier logistic, retail and industrial companies are attracted more than ever by Victoria's impeccable transport infrastructure, the efficiency of Melbourne Ports, high standard of blue and white collar work force – all of which continue to position Melbourne’s industrial and logistics sector as an attractive destination for capital.”