Commence of warehouses in Melbourne slows

In the wake of being the most dynamic modern city in the country in recent years, take-up for industrial warehouses has eased back significantly in the main portion of 2023 across the Melbourne market, down 45% from a similar point in 2022. 

Melbourne industrial market from Colliers experts Luke Crawford from Research, Gordon Code from the Victorian Industrial Business, and Hugh Gilbert from Colliers. 

However, experts in the industrial real estate industry at Colliers predict that by 2026, vacancy for future supply in all Victoria markets will be between 2% and 0%, preserving the gains in effective rents made in the previous two years despite more difficult economic conditions. 

“Industrial occupiers have recently shown a greater desire to accommodate newer, modern premises to meet operational efficiencies and expansions,” said Code. 

Colliers’ information uncovers that speculative stockpiles across Melbourne will bounce by 42% in 2023 contrasted with 2022. The request keeps on offsetting supply overwhelmingly, which will keep on driving down openings and put vertical pressure on viable rents. 

“Partly driven by the minimal vacancy for existing A-grade stock and with B and C-grade supply no longer appropriate for most corporate industrial occupiers due to design inefficiencies and OH&S issues,” said Code. 

Colliers Director of Research, Luke Crawford, anticipates that supply should miss the mark concerning request, pushing the record low opportunity significantly further, with Melbourne’s modern opening rate at present estimating 0.8 percent in June 2023 – down from 1.0 percent at a similar point in 2022 and 2.3 percent in mid-2021. 

“The issue is that demand isn’t being met, as there’s not enough new supply, making speculative stock extremely competitive and being snapped up about 18 months prior to completion across Melbourne’s industrial markets,” said Code.

“Given the lack of leasing options, industrial landowners are capitalising on the favourable leasing market and are progressing speculative developments as most facilities delivered in recent years have been leased before practical completion,” said Gilbert.