MHD PROPERTY FOCUS
ALL ROADS LEAD WEST Colliers International works with industrial property clients to maximise the potential of property and accelerate their success. This month, we focus on the Melbourne West industrial market and the current industrial environment with Hugh Gilbert, Director at Colliers International.
Melbourne’s West is now front of mind for so many occupiers that are making supply chain decisions.
I
t should be no secret to most that the Melbourne West industrial market has in recent times been (by far) the most active industrial market in Australia. In fact, in 2019, the Melbourne West institutional market was responsible for 80 per cent of the development between Victoria’s two key industrial markets (West & SouthEast). Not only that, the Melbourne West market became Victoria’s biggest in 2019 after overtaking the South-East that calendar year. Clocking in at the end of the calendar year at 8,015,323Sqm the Melbourne West industrial market counts over 55 per cent of its ownership as controlled by institutional owners such as Charter Hall, Blackstone, Frasers amongst others.
SO, WHAT IS DRIVING ALL THE ACTIVITY? Quite simply – occupiers – businesses like yours that lease industrial real estate. In 2019, there was just under 1,000,000 Sqm taken up by occupiers 62 | MHD MAY 2020
in Melbourne’s West with just under 400,000 Sqm (675m) of that activity being via pre-commitment development of purpose-built facilities.
SO WHAT IS DRIVING BRANDS LIKE UNIQLO, SUPER AMART & ROCKET LOGISTICS TO MELBOURNE’S WEST? While there are various factors favouring the West Melbourne market, one overarching factor for the wider industrial market is of course changes in consumer behaviour with large occupiers reconsidering their supply chains and their footprints. Traditional bricks and mortar retailers are either leading with innovation or having their hands forced into the online arena. The resulting impact is creating a surge in demand for warehousing to store product reserved for online orders. So understanding the structural shifts in the industrial sector are driven by changes in buying behaviour (Online retail grew at 23.5 per cent 2019/20), what are the other factors that are
putting the West as front of mind for so many occupiers that are making supply chain decisions, and why are so many occupiers making the move to Melbourne’s West (In 2019, 35 per cent of occupier activity was driven by occupiers migrating from other state and interstate markets)? Well there are various factors! Displacement in other markets – The old saying is ‘they’re not making any more land’ and as the wider industrial market has begun it’s boom under the structural shift of E-commerce and all of the desired and promised delivery times that come with it, many markets have been restricted in being able to satisfy requirements or at least satisfy them economically. This was evident with Isuzu’s Head Office migration to the West Melbourne market from Port Melbourne after Colliers International brokered the deal. While Port Melbourne was a long-term home to Isuzu, it was no longer viable due to cost and lack of choice. In terms of land supply Melbourne’s South-East has circa 200
