Cranes and equipment drive industrial leasing demand
Vacancy across the city’s industrial markets ranges between 2.3 to 3.3 per cent.

Cranes and equipment drive industrial leasing demand

Melbourne’s large pipeline of infrastructure projects is adding to demand from e-commerce for warehouses and worksites, keeping industrial vacancy rates low and fuelling investment in the sector.

An estimated $83 billion is due to be spent on transport infrastructure across Victoria over the next decade, with $37 billion under way or committed.

Another $2.7 billion in building work packages is promised to drive major transport investment as part of the state’s COVID-19 recovery.

The injection of funds for infrastructure is resulting in a significant increase in leasing inquiry, CBRE’s Ricardo Cappelletti said.

Demand is coming from scaffolding, crane, pumping, industrial cleaning, equipment hire, concreting and demolitions firms.

Equipment rental company Vortex Group is leasing a 2241 square metre site at 106 Boundary Road in Sunshine West for five years at a rental of $180,000 a year.

Scaffolding supplier Scafeast signed up to a 1340-square-metre site at 117 Pipe Road in Laverton North at $120,000 in annual rent.

Mr Cappelletti said e-commerce’s strength in the market had skewed interest towards large, sophisticated warehouses which typically had limited hardstand.

“With more industries becoming reliant on road freight, there could be a potential over-supply of buildings that offer fantastic warehousing capabilities, but lack support for truck and container movements,” he said.

Colliers International’s industrial director Jonathan Mercuri said contractors Laing O’Rourke are in the market for a 4000-square-metre site after winning a joint contract to remove level crossings at Manchester Road in Mooroolbark and the Maroondah Highway in Lilydale.

CPB Contractors, a firm working on stage two of the Monash Freeway widening, are also looking for a similar sized worksite.

ESR Australia and Singapore’s GIC recently struck an $80 million deal to buy land for a new $450 million logistics hub at 590-620 Western Port Highway in Cranbourne West.

The 79 hectare site is located near the distribution centres of major retailers and online groups such as Aldi, Amazon, Bunnings, GraysOnline and Woolworths.

Vacancy across the city’s industrial markets ranges between 2.3 to 3.3 per cent, except for Melbourne’s north where it’s an inflated 8.4 per cent, according to Collier’s latest figures.

The high figures in the city’s north are due to several recently completed speculative developments, including 151 Property’s 38,764 square metres Biodiversity Business Park, and automotive manufacturer Ford and retailer Woolworths moving out of large industrial facilities.

Ford and Woolworth’s sites are likely to be split into smaller tenancies and quickly absorbed, Colliers maintains.

Industrial occupiers in the area leased 200,000 square metres in 2019 and have taken up 100,000 square metres this year so far.