Industrial space in Melbourne’s west is in high demand, outstripping supply and encouraging major tenant pre-commitments.
A lack of speculative development during and after the global financial crisis has led to a short supply of sites and pent-up demand.
A 23,455sqm office and warehouse space, purpose-built for Kraft Foods, is the latest in a spate of pre-lease deals.
Knight Frank brokered the deal between Kraft and the Gibb Group for the Derrimut warehouse, west of the city.
Qanstruct will build the warehouse on the 46 hectare site in the Paramount Industrial Estate. The project is expected to be finished by June.
Gibb Group managing director Matthew Gibb said the transaction was one of the largest in recent years.
Knight Frank industrial director Andrew Macqueen said the site faced a major arterial, the Western Ring Road, placing Kraft near neighbours such as Volkswagen and Air Road.
Mr Macqueen said similar site rentals averaged about $75 a sqm, which was a rise for the western suburbs on recent years but still relatively affordable.
Port Melbourne sites tend to lease for at least $120 a sqm.
He said tenant demand in coming years was expected to put pressure on vacancy levels and increase the number of pre-commitment leases.
Mr Macqueen said some tenants looking fora site could benefit from building to specifics rather than waiting to find the right site, particularly if a large space was needed.
CBRE released a MarketView report yesterday that showed nearly 5 per cent year-on-year rental growth in Melbourne’s industrial property market.
However, no growth was recorded for the fourth quarter of 2011.
While CBRE recorded flat rental trends in Sydney, Adelaide and Canberra industrial markets, Melbourne’s tight supply and thriving trade through the Port of Melbourne resulted in the strong growth.
Perth and Brisbane are still at the forefront thanks to the resources boom.
Rents in Perth increased by more than 3 per cent year-on-year and by 0.4 per cent for the fourth quarter, and Brisbane rents rose from 4.4 per cent year-on-year and 2.1 per cent in the last quarter.
AFR – 13 March 2012