More space in Melbourne's warehousing district is shifting balance of power towards trucking firms looking for property
By Ruza Zivkusic-Aftasi | May 30, 2013
Increased space in Melbourne’s warehousing district is causing a drop in rental prices to give transport operators the whip hand when it comes to choosing property.
Industrial and logistics services real estate group CBRE says about 100,000 square-metres of private space will be released this year and that transport firms coming out of long-term leases are finding that the market rental rates are a lot lower.
CBRE Manager Todd Grima says available space means operators can be selective, compared to about five or six years ago when the market was tight.
“They’re finding themselves coming out of these leases with a rent significantly higher than what the market rent would be. If their landlords aren’t willing to play ball, with the amount of stock being built around the private sector there’s a healthy competition to get these guys a really good deal,” Grima says.
CBRE has noticed a lot of prime stock in the west has been taken up, particularly in Truganina, West Park and Altona.
Grima says the west has always been a preferred location for transport operators due to the close proximity to the Port of Melbourne and competitive land prices.
“With build cost at an all-time low it’s resulting in a much cheaper rent in the western market and I think that is a reason why we’re seeing so much activity out there,” he says.
Grima adds that there was an influx of enquiries at the beginning of the year but the impending federal election and the end of the financial year have caused a slowdown.
“I think across the board there was a lot of smoke but not a lot of fire. There has been things happening but I would say the enquiry level has dropped off in the last eight weeks,” he says.
“Tenants are definitely moving with caution and I guess they’re in a position to do so because five to six years ago if you had a listing there’d be people fighting over it.
“Now they’re able to pick and choose where they want to go and I think unless they have a lease expiry coming up where they have to move in a certain timeframe, they’re definitely taking their time and sitting on their hands.”
