Melbourne industrial property deals surged to a record $1.92 billion in transactions in 2016, a 15 per cent increase on the previous year.
Melbourne was the strongest performer nationally, in a year where the national total spend fell to $4.83 billion, down from a record $5.26 billion in 2015, according to research from agents CBRE.
While a lack of stock held down the national total, the number of deals in Melbourne increased to 70 in 2016 up from 60 in 2015. Yields compressed a further 10 basis points to 6 per cent.
The appetite for industrial come as investors, local and offshore, look for high-quality buildings to stuff into their portfolios or other assets that have scope for development and improvement.
CBRE industrial agent Rory Hilton said "It was a strong year for offshore investment in Melbourne's industrial and logistics market – with global capital looking for opportunities that offered scale and quality in key markets.
"There are unprecedented levels of both domestic and offshore capital seeking industrial assets in all of Melbourne's core industrial precincts," he said.
Key deals transacted at the end of the year include Altis Property Partners' purchase of a portfolio of 10 buildings in Cheltenham for nearly $90 million and the $50 million sale of a 6.3-hectare Altona North factory at 278-288 Blackshaws Road.
The enthusiasm for industrial property is reflected at every level of the market. Stage 1 of the six-hectare Interlink Business Park in Keysborough sold out within 12 weeks of release.
The 12 allotments fetched up to $375 a square metre, setting a new benchmark for industrial land in the south-east.
Savills director Kosta Filinis, who negotiated the sales with Colliers International's Gordon Code, said the deals reflected a shortage of land around key transport nodes in the area.
"The previous high was circa $325 whereas every one of these lots sold for more than $340, with one selling at $375," Mr Filinis said.
"That's an extraordinary result, which reflects the severe shortage of sites, especially those offering flat land and the best access to freeways."
Mr Code said most of the allotments were bought by developers and owner-occupiers who want proximity to EastLink.
"Freeway access remains the key determinant. It can prove a valuable contributor to the bottom line in the very competitive industrial markets," he said.
In the west, Cadence Property Group director Charlie Buxton said stage one of a new $250 million mixed-use business park, The Crossing, was 60 per cent sold after only two weeks of marketing.
Mr Buxton said prices for the 37 lots – between $180 and $235 a square metre – were up 15 per cent compared with similar land sold 12 to 18 months ago.
"Demand is being driven by a huge influx of new residents into the local area and inquiry has predominantly been strongest from small business owners and local developers and investors," he said.
Other areas are also benefiting from proximity to transport routes. In the north-west, a 16,095 sq m development site at the front of MAB's Orbis business park fetched $4.1 million less than three weeks after it went on the market. CVA agents John Nockles and Leo Mancino did the deal.
And in Ringwood, next to EastLink, the 1.8-hectare Stokes Electrical site is about to be redeveloped into the Palmerston Business Park with a 24 warehouses and 21 offices.
