Major new road infrastructure is likely to overcome Melbourne’s shortage of serviced industrial land.
According to research by national independent property advisers and valuers LandMark White, industrial land values have risen due to a shortage of serviced land.
However, LandMark White’s Victoria director Rex Stafford predicts change with three major road infrastructure projects in the pipeline.
“There is currently 5,500ha of industrially zoned land undeveloped in and around Melbourne, predominantly in west and south-east regions,” Stafford says.
“However, site values have jumped in the past 12 months while there is a temporary shortage of serviced land.”
Major road projects which are expected to affect industrial land are:
* Craigeburn bypass (mid-2005)
* Eastern Freeway Extension (late 2007)
* Mitcham-Frankston Freeway (formerly
* Scoresby Freeway project) late 2008
Stafford says that in the short to medium term prospects for the rental market for serviced industrial land in Melbourne are good.
“From our most recent survey of industrial property, leases above 1,000sqm totalled 418,940sqm, which was down from last year, but occupier demand remains historically strong.
“Over the past 12 months, industrial rents increased by an average 5.3% across Melbourne.
“Rental growth is expected to continue to perform and we anticipate an average growth of averaging 3.5% over the next five years,” he says.
“Due to crystallised future rental growth, yields are not expected to tighten any further in Melbourne from a baseline of 8.25% and moderating.”
