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Savills Research
Victoria
Spotlight
Melbourne Industrial
April 2015
Highlights
 Melbourne’s infrastructure continues



to give it a competitive advantage
A total of 714,977 square metres was
reported leased in the year to March
2015
Pre-commitment activity accounted
for 196,991 square metres of
reported leasing
Industrial rents generally range from
$67 to $95 a square metre for prime
industrial space
 A total of $1.37 billion of industrial



property was sold in the year to March
2015
Land values range from $95 to $225 a
square metre for land between 1 and 5
hectares
Investment yields for prime industrial
property in a range of 6.75% to 7.75%
Signs of a recovery in tenant demand
are now underway with solid increases
in recent levels of leasing activity
Strong competition
from local
Institutions &
Privates as a
record number of
sales transact
Savills Research
Savills Research | Melbourne Industrial
April 2015
Savills Victoria Team
Research
Valuation & Consultancy
Director
Glenn Lampard
+61 3 8686 8034
Director
Ross Smillie
+61 3 8686 8068
[email protected]
[email protected]
Industrial North West suburbs
Director
Greg Jensz
+61 3 8686 8005
Director
Tim Casanelia
+61 3 8686 8045
[email protected]
[email protected]
Director
Michael Green
+61 3 8686 8073
Director
David Norman
+61 3 8686 8035
[email protected]
[email protected]
Industrial South East suburbs
Director
Lynton Williams
+61 3 9947 5101
Director
Kosta Filinis
+61 3 9947 5106
[email protected]
[email protected]
Industrial Investments
Director
Ben Hegerty
+61 3 8686 8074
Director
Chris Jones
+61 3 8686 8007
[email protected]
[email protected]
Commercial Management
Project Management
Associate Director
Sarah Coster
+61 3 8686 8025
General Manager
Chris Adam
+61 3 9445 6841
scoster @savills.com.au
[email protected]
Savills Victoria
Level 25, 140 William St
Melbourne VIC 3000 Australia
+61 (0) 3 8686 8000
savills.com.au
savills.com.au/research 2
Savills Research | Melbourne Industrial
April 2015
Introduction
Melbourne is Australia’s largest industrial property market in terms of the amount of land stock with in excess of
25,000 hectares. Industrial users range from domestic service industries such as mechanics and smash repairers to
local and national distribution facilities and major manufacturing plants. Some of these industrial requirements are
replicated in all capital cities of Australia.
Aside from being the largest industrial property market in the country there are a number of other discriminating
factors about Melbourne and industry. First, approximately 40% of Australia’s container shipping travels through the
Port of Melbourne. This cements the position of Melbourne as a substantial distribution centre. Second, Melbourne
remains the manufacturing centre of Australia.
Throughout this document the Melbourne industrial market will be referred to in three main precincts being the
South East, North West and City Fringe. The main suburbs within these precincts are tabulated below.
Precinct
Suburbs
South East
Dandenong, Braeside, Mulgrave, Clayton, Moorabbin, Rowville, Knoxfield, Scoresby,
Bayswater, Croydon, Keysborough, Mt Waverley, Notting Hill, Carrum Downs
North West
Somerton, Campbellfield, Epping, Thomastown, Broadmeadows, Tullamarine, Footscray,
Sunshine, Altona, Deer Park, Laverton North, Derrimut, Brooklyn, Truganina
City Fringe
Port Melbourne, West Melbourne, North Melbourne, Richmond, Collingwood, Abbottsford,
Brunswick, South Melbourne
Source: Savills Research
Infrastructure
Melbourne has, without doubt, the
best industrial infrastructure in the
country. The road system built in the
last decade has created a major
heavy vehicle route through the
centre of the city with a ring road
giving easy access to all of
metropolitan Melbourne. The road
system allows almost uninterrupted
access to interstate routes from
anywhere within the metropolitan
area.
In 2008 the Australian Government
established the Building Australia
Fund to fund critical infrastructure
projects, including transport. In the
2009/10 Budget, the Australian
Government committed $8.5 billion
to projects for road, rail and port
infrastructure, of which, $7.8 billion
is to be funded through the Building
Australia Fund. For Victoria this
included preconstruction work for
the Melbourne Metro 1 (formerly
known as East-West Rail tunnel),
aimed at informing the best way to
deliver the construction of a new 8
kilometre, two track rail tunnel
running under the Melbourne City
Business District to relieve
congested rail lines and improve
travel times. With construction
commenced in 2009, the Regional
Rail Link is also funded as part of
the Building Australia Fund. This link
will provide up to 50 kilometres of
dual track rail link from West
Werribee to Southern Cross Station
in central Melbourne via Sunshine
and is approaching completion.
instructed the East West Connect
Partnership to immediately suspend
works on the East West Link. Work
is instead expected to be prioritised
towards the election commitment of
removing what it has identified as
fifty of the State’s most dangerous
and congested level crossings.
First identified in Sir Rod
Eddington’s independent study into
transport connections across
Melbourne in 2008, the planning and
consultation study for the western
section (WestLink) of the East West
Link commenced in 2009. Planning
was underway for the first stage of
the East West Link following the
release of the former State
Government’s impact statement in
late 2013. The contract for
construction and maintenance was
awarded to East West Connect and
Stage 1 was expected to begin
before the end of 2014. The new
majority State Government arising
from the November 2014 election
however, ran on the platform that
the East West Link contracts would
not be honoured because the
project was based on a legally
unsound business case. As a result,
the new Victorian Government has
Under the former Victorian State
Government, the Port of Hastings
was to be the preferred site for
future container development, with
container throughput at the Port of
Melbourne expected to quadruple
over the next 25 years. The solution
was to supplement rather than
replace Melbourne, with both ports
expected to continue to operate in
parallel. The new State Government
shares the previous Government’s
aspiration for a proposed second
container port; however it is likely to
consider an alternative location at
Bay West, Little River, near Geelong,
as per pre-election undertakings.
The new State Government pledged
prior to the election that if elected, it
will establish Infrastructure Victoria
(InVic) and Projects Victoria,
independent bodies to look at major
projects around the State.
savills.com.au/research 3
Savills Research | Melbourne Industrial
April 2015
Leasing Activity
Savills monitors reported industrial
leasing activity of premises with
greater than 1,000 square metres of
GLA. A total of 714,977 square
metres of industrial space was
reported leased from 100 deals in
the year to March 2015. The
previous twelve months by
comparison recorded a total of
408,010 square metres of stock
leased from 78 deals. This result
suggests an improvement in
conditions from an environment that
has been a difficult one for landlords
and developers in recent years.
This is further emphasised when
compared favourably to the decade
average prior to this year of 597,502
square metres per annum.
The table below details select major leases reported.
Select Melbourne Industrial Existing Leases to March 2015
Property
Jan-15
4 Saligna Dr, Tullamarine
1,484
94
Hazard Systems
Jan-15
2 Silverton Cl, Laverton North
2,316
76
Joel Australia
Jan-15
2 Kingsley Cl, Rowville
1,252
68
Living Elements
Feb-15
U1, 49 Calarco Dr, Derrimut
3,100
75 G
Umicore
Feb-15
400 City Rd, Southbank
9,000
111
Planetshakers
Feb-15
235-239 Abbotts Rd, Dandenong
1,873
80
Evo Pet
Feb-15
U9, 137-145 Rooks Rd, Nunawading
1,412
139
Kordia Solutions
Feb-15
8 Saintly Dr, Truganina
14,000
75
Fastline Logistics
Feb-15
416 Somerville Rd, Tottenham
5,124
na
Olima
Mar-15
234-238 Boundary Rd, Braeside
2,176
67
Adriatic Stone
Mar-15
31 Technology Ct, Hallam
2,008
80
Cool Breeze
Mar-15
45 Greens Rd, Dandenong South
1,122
67
Rexel Electrical Supplies
Source: Savills Research
GLA (sq m)
Rent
Date
($/sq m)
Tenant
na = not currently available
Of the space reported leased during the past year, the focus has been in the North West (66 percent) with the South
East essentially taking the remainder (32 percent). City Fringe accounted for less than 2 percent of leases reported.
Select Melbourne Industrial Pre-Commitment Leases to March 2015
Property
Jun-14
16 Reid Way, Melbourne Airport
4,000
na
Nippon Express
Sep-14
Cnr Sunline & Efficient Dr, Truganina
14,570
77
Austrans
Sep-14
Tullamarine Dr, Tullamarine
43,000
na
TNT
Sep-14
Tullamarine Dr, Tullamarine
70,000
na
Toll Holdings
Sep-14
70-86 Atlantic Dr, Keysborough
6,698
90
Adairs
Nov-14
Fitzgerald Rd, Derrimut
4,700
111
Vermeer
Dec-14
Key Industrial Estate, Kesyborough
15,000
85
Miele Australia
Jan-15
70-86 Atlantic Dr, Keysborough
6,789
90
Bluestar Group
Mar-15
Logis Blvd, Dandenong South
5,940
na
Woodhouse Timber Co.
Source: Savills Research
GLA (sq m)
Rent
Date
($/sq m)
Tenant
na = not currently available
savills.com.au/research 4
Savills Research | Melbourne Industrial
Savills recorded 196,991
square metres of
precommitment activity in the
year to March 2015. This is a
solid improvement on the
activity recorded in the
preceding twelve months
(85,614 square metres), and
down slightly on the historical
ten year average of 202,017
square metres. This is
indicative of generally
improving business
confidence with a perceived
recovery in financial markets
and a reduction of a
comparatively high Australian
dollar which prior to mid 2013
was at parity or higher against
the US dollar. Development
finance generally continues to
be difficult to acquire,
expensive and is dependent
on precommiting covenant.
There have been some
significant precommitment
deals successfully completed.
These include Goodyear
Australia (31,700 square
metres, Derrimut & 8,100
square metres, Truganina),
Austrans (14,570 square
metres, Truganina), Adairs
(6,698 square metres,
Keysborough), Miele Australia
(15,000 square metres,
Keysborough), Bluestar Group
(6,789 square metres,
Keysborough), Woodhouse
Timber Company (Dandenong
South) and substantial
precommitments to TNT and
Toll Holdings in Tullamarine.
Competition remains strong
among developers to secure
pre-lease tenants, limiting
upward pressure on rents.
Whilst some speculatively
build developments in the last
18 months have been met with
some success, tenant demand
generally does not support
such. This may change as
available prime grade space
becomes more limited.
April 2015
Melbourne Industrial
Metropolitan Leases by Lease Type (sq m)
Mar-05 to Mar-15
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Source: Savills Research
Direct
Precommit
Melbourne Industrial
Metropolitan Leases by Lease Size (sq m)
Mar-05 to Mar-15
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
< 2,000
2,000 - 5,000
5,000 - 10,000
10,000 - 15,000
> 15,000
Source: Savills Research
Over the six years from 2001 to 2007 low interest rates encouraged many
industrial occupiers to become owner-occupiers. Approximately 20 percent of
reported sales over those six years were to owner-occupiers. This led to a more
subdued rental market than would have otherwise been the case. The prevailing
low interest rate environment has again been providing opportunities in the owner
occupier market which until very recently represented circa 17% of reported sales
value and is currently 12% over the year to March 2015 as Private Investors and
Fund purchasers in particular increase their presence as a proportion of total
sales. Over the decade, the growth in rents has been due mostly to the ongoing
erosion of development profit margins.
savills.com.au/research 5
Savills Research | Melbourne Industrial
Construction costs have
generally retreated in recent
years whilst pre-commitment
rents have remained steady,
albeit with the introduction of
incentives. We believe the
industrial rental market is
entering a stage where
improving fundamentals may
build a case for upward
pressure on rents, though at
levels at or below CPI.
Sales Activity
Savills monitors reported
industrial property sales
activity with a price greater
than $2 million. Over the year
to March 2015 a total of 138
sales were reported with a
total value of $1,367 million.
This was substantially more
than the level recorded over
the previous twelve month
period when a total of $1,015
million of sales were reported.
The number of transactions
was also up significantly on
the 78 recorded in the
previous period.
Melbourne’s South East
recorded the most number of
transactions in the year to
March 2015 with 76 (55% of all
sales), however it was the
North West region that
accounted for the greatest
dollar volume with 46 percent
of the total transaction value
for the year.
In the South East, the Private
Investor buyer group slightly
edged out the combined Fund
and Trust category, with 30
percent and 28 percent of the
value of stock reportedly sold
respectively. Owner Occupiers
have a comparatively high
proportion also, accounting for
19 percent of total sales value.
Fund and Trust investor
demand is traditionally strong
in the North West, however
Private Investors represented
the largest buyer category by
value of all stock, at 41
percent. Funds and Trusts
made up 23 percent of total
sales volume.
April 2015
Sales in the price range of $2 million to $10 million made up a robust 31 percent of
total sales activity by value. A total of $424 million dollars was exchanged in this
price bracket which is up on the 10 year average of $317 million. Significantly,
$638 million was transacted in the price bracket greater than $20 million which is
considerably higher than the prior 10 year average of $426 million.
Melbourne Industrial
Average Prime Net Face Rents by Precinct ($/sq m)
Mar-05 to Mar-15
$140
$120
$100
$80
$60
$40
$20
$0
City Fringe
North & West
South Eastern
Source: Savills Research
Melbourne Industrial
Metropolitan Industrial Sales ($m and number)
(>$2m) Mar-05 to Mar-15
$2,000
160
$1,800
140
$1,600
120
$1,400
$1,200
100
$1,000
80
$800
60
$600
40
$400
20
$200
$0
0
Sales >$2m (LHS)
Sales No (RHS)
Source: Savills Research
Melbourne Industrial Land Values – March 2015
Precinct
3,000 – 5,000 sq m
($/sqm)
10,000 – 50,000 sqm
($/sqm)
10ha +
($/sq m)
Englobo
($/sq m)
North & West
145 – 225 up to 300
95 – 155 up to 200
70 – 100
20 - 60
600 – 900
500 – 800
na
na
185 – 240 up to 300
170 – 250
110 – 140
30 – 80
City Fringe
South Eastern
Source: Savills Research
na = not currently available
savills.com.au/research 6
Savills Research | Melbourne Industrial
April 2015
The following tables highlight a selection of industrial sales for the year to March 2015.
Select Melbourne Industrial Investment Sales to March 2015
Date
Property
Price
($m)
GLA (sq m)
$/sq m
Yield (%)
Jun-14
4 Kingsway, Moorabbin
22.60
28,490
793
8.60
Jun-14
13-15 Joel Crt, Moorabbin
19.00
17,512
1,085
8.15*
Jul-14
Cooper St, Epping^
77.40
na
na
9.60
Aug-14
215 Browns Rd, Noble Park
20.80
43,949
473
10.00
Sep-14
32-58 William Angliss Dr, Laverton North
43.50
46,052
945
8.08*
Sep-14
13-19 William Angliss Dr, Laverton North
49.00
50,930
962
na
Sep-14
495-501 Blackburn Rd, Mount Waverley
63.00
23,724
2,656
8.60
Sep-14
42-44 Garden St, Kilsyth
19.00
25,887
734
8.50
Oct-14
365-391 Plummer St, Port Melbourne
30.00
19,400
1,546
na
Nov-14
39 Gregory St, Ballarat
8.25
13,657
604
8.30
Nov-14
573-577 Springvale Rd, Mulgrave
8.05
4,000
2,013
6.20
Dec-14
2-12 Banfield Crt, Truganina
95.00
76,938
1,235
6.50
Dec-14
28-38 Salta Dr, Altona North
14.50
23,854
608
na
Dec-14
106-110 Micro Ct, Dandenong
3.04
2,424
1,254
6.75
Feb-15
Estate One, Dandenong South
39.25
27,919
1,406
7.70
Mar-15
Keysborough Distribution Centre
36.60
40,000
915
na
Source: Savills Research
* equated yield
^under construction
**part of portfolio
na = not currently available
Select Melbourne Industrial Vacant Possession Sales to March 2015
Date
Property
Price
($m)
GLA (sq m)
$/sq m
Dec-14
1663 Centre Rd, Springvale
4.61
4,512
1,022
Dec-14
16 Crompton Wy, Dandenong South
3.98
3,054
1,302
Dec-14
155-157 Wellington Rd, Mulgrave
3.15
2,409
1,308
Mar-15
36-40 Futura Rd, Keysborough
2.85
4,722
604
Mar-15
308-316 Abbotts Rd, Dandenong South
7.70
10,714
719
Mar-15
77 Rushdale St, Knoxfield
2.88
2,375
1,211
Source: Savills Research
Select Melbourne Industrial Land Sales to March 2015
Date
Property
Price
($m)
Area (sq m)
$/sq m
Aug-14
1 Audsley St, Clayton
2.40
6,400
375
Aug-14
215 Cooper St, Epping
10.00
460,000
22
Dec-14
165-211 Robinsons Rd, Ravenhall
6.18
31,727
195
Jan-15
33-39 Chelmsford St, Williamstown
2.30
5,978
385
Feb-15
Canterbury Rd, Braeside
6.50
232,850
28
Source: Savills Research
savills.com.au/research 7
Savills Research | Melbourne Industrial
The dynamics of industrial
buyers has changed
significantly since the global
credit crisis and has impacted
most profoundly on trusts and
funds.
In 2008 and 2009 Savills
witnessed a considerable
return to the industrial property
investment market of private
investors. These investors
were largely sidelined in the
years leading up to the peak of
the market in late 2007 as the
weight of money invested by
trusts and funds placed
upward pressure on capital
values, out-pricing other
investors. Private investors
represented 60 percent of total
activity ($365 million) in 2009
while there were no purchases
by trusts and only $9 million in
purchases by the funds.
April 2015
Government
0%
Undisclosed
0%
Melbourne Industrial
Metropolitan Industrial Sales Buyer Profile (%)
(>$2m) 12 months to Mar-15
Private Investor
36%
Developer
12%
Foreign Investor
9%
Syndicate
8%
Fund
18%
Source: Savills Research
Trust
5%
Owner Occupier
12%
Melbourne Industrial
Average Prime Market Yields by Precinct (%)
Mar-05 to Mar-15
10.0%
In the last two years, Funds
and Trusts have returned to
the market to generally
represent circa 40 percent of
the total value of transactions.
Given the amount of capital
raising, debt restructuring and
slow easing of restrictions to
debt finance, Funds and Trusts
are generally better positioned
to actively participate in the
market.
Private investors were until the
year 2013, the dominant buyer
in the industrial market. They
remain a significant part of the
investor market, particularly at
present with the combatively
high volume of sales sub $20
million.
Owner occupiers accounted
for the purchase of 12 percent
of stock greater than $2 million
reported as sold in the
Melbourne industrial market. A
continued high number of
owner occupiers as a buyer
category is expected as the
low interest rate environment
is likely to remain, with some
expectation around a further
decrease in official cash rates
in the coming quarter.
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
City Fringe
North & West
South Eastern
Source: Savills Research
Melbourne Industrial
Average Prime Capital Values by Precinct ($/sq m)
Mar-05 to Mar-15
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
City Fringe
North & West
South Eastern
Source: Savills Research
savills.com.au/research 8
Savills Research | Melbourne Industrial
April 2015
Market yields for prime industrial buildings as at March 2015 are estimated to range between 6.75% and 7.75% for
each of Melbourne’s sub regions; the North West, South East and City Fringe. Recent downward pressure on
industrial prime yields has occurred as Funds and Trusts have increasingly returned to the sector. After remaining
steadfast for several years, prime yields at both ends of their range have indicatively come in 50 to 100 basis points
over the last twelve months.
Despite little or no change to prime industrial face rents in Melbourne’s sub regions, the compression of yields has
helped return some value to industrial assets over the last twelve months. Indicative prime capital values for assets
in the North West and South East have increased around 8.6 percent for the year to March 2015.
Key Market Indicators – March 2015
South Eastern
Prime
Secondary
Low
High
Low
High
70
90
55
65
Yield (% Net Face Rental)
6.75
7.75
8.25
9.00
IRR (%)
8.50
9.25
9.50
9.75
11
15
9
13
1,100
1,450
775
900
Rental – Net Effective ($/sq m)
Outgoings – total ($/sq m)
Capital Values ($/sq m)
North & West
Prime
Secondary
Low
High
Low
High
67
80
50
60
Yield (% Net Face Rental)
6.75
7.75
8.25
9.00
IRR (%)
8.50
9.25
9.50
9.75
Outgoings – total ($/sq m)
10
15
8
15
Capital Values ($/sq m)
860
1,150
550
750
Rental – Net Effective ($/sq m)
City Fringe
Prime
Secondary
Low
High
Low
High
90
150
65
90
Yield (% Net Face Rental)
6.75
7.75
8.25
9.00
IRR (%)
8.50
9.25
9.50
9.75
25
38
25
38
1,250
2,200
800
1,100
Rental – Net Effective ($/sq m)
Outgoings – total ($/sq m)
Capital Values ($/sq m)
Source: Savills Research
savills.com.au/research 9
Savills Research | Melbourne Industrial
April 2015
Outlook
Melbourne is home to a large and competitive industrial property market. The market contains a wide range of
participants from end-to-end property solutions companies, investors and developers to owner occupiers and
tenants. The outlook for business investment remains strong and the outlook for manufacturing and exports has
recently improved given the depreciating value of the Australian dollar against other major currencies. Anecdotally, it
is the locally produced goods likely to fill sheds in order to satisfy the improving domestic demand for domestic
product given comparatively cheaper prices to imported goods. Strong demand for food manufacturing in particular
was reflected in double digit growth in the hospitality retail categories for the 2014 year. This compared to only a 5.4
percent annual increase in total retail turnover on a seasonally adjusted basis.
The industrial sector has also benefited from structural issues in the retail sector, provided by the new business
model strategy of “Clicks and Bricks” (online retailing). Anecdotally, growth in online shopping is being driven locally,
both by purely internet based sellers and to a smaller extent, existing traditional retailers. Warehouse space is
currently being occupied by goods for sale at bricks and mortar locations. But at the periphery there is a very large
business growing in taking goods from warehouses direct to people's houses. Over the next 10 years it is probable
to go in leaps and bounds. It is expected that the traditional retailers will compete by setting up their version of
Clicks and Bricks, reducing the number of retail outlets and going into warehouses. Traditional domestic retailers
would be expected to increase their industrial exposure as the domestic market becomes more competitive given
the recent reduction in the value of the Australian dollar to the US dollar in particular.
The global credit crisis did impact the Melbourne industrial property market. Developers experienced difficulty
accessing appropriate funding for new developments and, to a lesser extent, refurbishments effectively choking
supply. A gap emerged between vendor and buyer expectations resulting in a “standoff” in the sales market. Savills
believes these factors have abated and the market has returned to its fundamentally strong position. Activity was
solid throughout 2011 but soft market conditions remained over 2012 and 2013 as the global financial markets
remained volatile with the domestic economy soft and the currency generally strong. A lack of consumer and
business confidence has frustrated any real economic recovery although current levels of leasing and investment
would suggest that recovery is now underway.
We expected 2014 to provide an improvement in activity as higher population growth starts to impact favourably on
domestic economic conditions. Whilst the occupational side of the industrial market is coming from a subdued base,
we believe there to be a start in the recovery, reflected by the improving leasing transaction scenario. We also
expect financial markets to become more stable adding to an improvement in industrial conditions. Private Investors
have clearly been attracted to the comparatively high investment yields, the simple investment parameters of
industrial – single tenant, simple building, long lease, low capital expenditure requirements. The weight of money
from institutional investors for prime industrial assets and resultant tightening of yields is likely to weaken demand
from a private investor perspective however; but this may yet give rise to demand opportunistic demand in the
secondary grade industrial market. Higher levels of market activity at the sub $20 million level suggest that this is
where privates are focussed to reveal opportunities, and yield. The low interest rate environment should also ensure
a proportion of owner occupier demand at the lower end of the market. Now that 2015 has brought with it continued
expectation of a low interest rate environment with the likelihood of a further reduction in our office cash rate, the
proportion of owner occupiers in the market should increase. The South East continues to record significant owner
occupier activity at 19 percent.
The Melbourne industrial property market is well placed to compete for occupiers of industrial property both
regionally and locally as it has not only an abundance of developable land at extremely affordable and competitive
terms, it also has a large workforce and world class infrastructure. Substantial investment in infrastructure is
ongoing. Whilst the outlook for demand is positive, the large supply of industrial land remains a pricing constraint
with more unzoned land also in reserve. This is expected to contain growth in pre-commitment rents as a function of
growing tenant demand. Nevertheless, there are locations in Melbourne where land availability is tight, especially
central and inner Melbourne. This has facilitated higher land rates in the last twelve months in some locations.
Savills expects key industrial market parameters to improve throughout 2015. With a perception that business
confidence is likely to return to the general economy, so too should there be further increases in transaction activity,
the start of which we have already witnessed. With some weakness continuing in the occupancy side of secondary
asset market however, investment activity is expected to remain primarily for the high quality or prime assets.
Investment transaction activity will be limited somewhat as the precommitted strong covenants being brought to the
market are in reduced numbers in the current environment. That being said, the trend of assets being brought to the
market as portfolios is likely to continue as vendors look to take advantage of the robust investment activity.
savills.com.au/research 10
Savills Research | Melbourne Industrial
April 2015
Savills Research Team
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