BING NEWS

Tenants and Owner-Occupiers Neck

Leasing activity in Melbourne’s west has been steady in 2015 YTD, with the majority of transactions occurring in the size range of 3,000 m2 – 8,500 m2.  This has been partly driven by the trickle-down of incentives from the 10,000 m2 plus sector of the market.  As a result, tenants have been capitalising on what is certain to be a short term trend, as prime building supply is set to become constrained.

Owner-occupier activity remains buoyant, and is only being held back by a lack of supply.  YTD the total M2 acquired by owner-occupiers and tenants is on par.  This is a statistic we have not witnessed since we commenced tracking data in 2005.  There has been fewer transactions in the owner-occupier sector, but there has been a number of large scale transactions that have contributed to this outcome.  Clearly the low interest rate environment is a major contributing factor to this trend, but it also reflects underlying confidence in the industrial sector.

Recent activity in the land sale market has been of significant interest.  There has been quite a sudden increase in land values within newly released land estates, as exemplified by Goodman’s Westside Estate where there has been significant and immediate take-up from both developers and owner-occupiers.  Pure fundamentals would suggest that rental growth would be necessary to support the land rates being transacted at present.