Melbourne leads industrial rental growth in Pacific region

Industrial rents in Melbourne have risen 1.8% in the first quarter of 2011 and 6.6% for the year, the fastest rental growth in Australia and the Pacific region, according to the latest CBRE MarketView report.

Melbourne was also home to the Asia Pacific region’s largest leasing deal of the quarter – Coles pre-let of 70,000 sqm of accommodation in Truganina, 21kms west of the Melbourne.

According to the report, the consolidation of distribution operations is particularly evident in the Melbourne’s west sub-region, where affordable land, attractive rents and excellent transport links to the Port of Melbourne have attracted development and cost-conscious occupiers.

The west sub-region comprises seven local government areas of Brimbank, Hobsons Bay, Maribyrnong, Melbourne, Melton, Moonee Valley and Wyndham. 

According to a Melbourne industrial market report released by Knight Frank in March, rents are cheapest in the west, at $69 per square metre, and most expensive in the city fringe, at $125 per square metre. On average, a square metre of prime industrial space in Melbourne costs $74, making it cheaper than Sydney, Brisbane and Perth, all of which feature on the top 10 most expensive industrial rental markets.

The CBRE report ranks Sydney the seventh most expensive location to rent industrial space, at $113 per square metre, with Perth eighth at $113.217 sqm and Brisbane ninth at $109.67 per square metre.

The most expensive industrial rents are to be found in Tokyo (US$22.15 per square foot), followed by London (US$20.04) and Singapore (U$14.04).

According to CBRE’s Global Industrial Rent Index, rental growth has been better than anticipated, with the index rising 1.3% over the March 2011 quarter – the largest quarterly growth since the second quarter of 2007. In the year to March 2011, industrial rents grew by 2.1%.