A shortage of industrial freehold land has led to prices in Melbourne’s northern suburbs soaring 31% in the 12 months to Q3 2006, according to Jones Lang LaSalle.
JLL’s industrial director Michael Green said demand for land in the North has exceeded supply and there are few estates offering large blocks for major development.
“The North is being squeezed three ways. The first is by the increased demand for industrial land, the second is by the capacity of service infrastructure and the third is by conservation issues related to preserving sensitive environmental areas.
“Between them they have reduced the supply of freehold industrial land to a trickle with virtually no blocks larger than 10,000 sqm in the market. The shortage of new and existing industrial properties has pushed prime rentals up 5.1% in the past 12 months which is the highest growth of any of Melbourne’s four major industrial markets,” Green said.
According to JLL Research, in the Q3 alone, land prices have risen 11.8% and land prices in Campbellfield jumped 31% from $170 per sqm to $190 per sqm.
Green said demand was clearly illustrated by the 47 hectare Metrolink Business Park developed by FKP in Campbellfield that sold Stage One in two months with nothing available to come onto the market until early 2007 when Stage Two was planned to be released.
In 2007, two major industry parks developed by MAB Corporation, Northcorp and National Business Parks, sold their last blocks of land and the only freehold land available are smaller blocks under 1,500 sqm.
“Developers, predominantly the major trusts, are now focussing on providing leaseback deals for tenants and this is not necessarily the first option for occupiers who want to control their premises.
“Macquarie Goodman had recently bought a strategic 57 ha parcel in Craigieburn at the junction of the Craigieburn bypass and the Hume Freeway. This parcel, which as the potential for rail access, is not anticipated to come online until 2007,” he added.
Green said major deals in the North Q3 2006 included the 43,000 sqm lease to LinFox at Somerton in the Austrak Business Park – the same place the logistic giant’s major client Coles Myer located to in 2005 with a 75,000 sqm distribution facility.
JLL Research found prime yields in the North dropped from 7%-8.25% to 7%-8%.
Green was recently awarded the winner of the 2006 Macquarie Goodman Real Estate Agent of the Year.
By Adam Parsons
