Land scramble leads to surging prices for industrial sites
Housing and industrial estates in Donnybrook.

Land scramble leads to surging prices for industrial sites

Part of the old Woodlands Park Estate in Donnybrook, an old farm north of Melbourne, is for sale and expected to fetch more than $160 million.

The two lots on 910 and 960 Donnybrook Road, once dairy and sheep grazing land, have been rezoned industrial as part of the Donnybrook-Woodstock Precinct Structure Plan.

They are one of the only PSP approved industrial holdings of any scale remaining in the city at a time when demand for industrial property is sky high.

The expressions of interest campaign is being handled by national real estate and advisory firm LAWD’s Peter Sagar, Paul Callanan and Darcy Tobin in conjunction with agent JLL’s Matt Ellis and Mario Moscon.

“We expect these opportunities to receive significant interest from a buying pool including major institutions, large privates, developers, and syndicates. Industrial is the new retail,” Sagar said.

Internet shopping, fuelled by the pandemic and lockdowns, has intensified the need for city-fringe warehousing and logistics.

The larger 76.45 hectare parcel at No.960 was bought by Donnybrook JV in 2015 for $13.92 million. Records show the joint venture is owned by private equity player CVC and Avid Developments.

Next door at No.910, the smaller 10.89 hectare lot was bought by a residential developer who is now planning to sell given the industrial zoning.

The land is close to major freight and transport hubs, including the Hume Freeway, the Ring Road, the Somerton Intermodal Terminal and Melbourne Airport.

Land on the city’s outskirts is increasingly hard to find, especially for development-ready assets, and that is boosting land values, Ellis said.

“Estimates show there is approximately only three to six years of forecasted supply remaining in Melbourne’s north based on consumption rates,” he said.

JLL research shows the value of industrial land in the north has doubled in the past two years to reach $800 a square metre. It was only $200 a sq m in 2018.

“It is becoming clear that all lot sizes are becoming scarce. The previous perception or myth that Melbourne’s core industrial markets have been largely oversupplied has been debunked,” he said.

Last month, construction firm Universal Corporation paid $95 million for 141 hectares of land next door to Linfox-owned Avalon Airport in the outer west. That move consolidates a new industrial precinct mooted by another neighbour, MAB Corporation which owns a 780 hectare neighbouring site.

More than $1 billion of land was sold off in the northern corridor last year, mostly for residential projects. Japanese telco Nippon Telegraph and Telephone Corp and local developer Yourland paid $100 million for a 76-hectare cheese factory at 915 Donnybrook Road and Western Australia-based Satterley Group reportedly paid $68 million for a 69 hectare site down the road at No.1100 from Chinese-backed Ouson.