Truck giant Scania will visit a new distribution center in north Melbourne at a time when empty sheds are scarce and the vacancy rate in the industrial sector is falling to an all time high.
The Swedish utility vehicle maker leases a 9,364 square meter warehouse with multiple loading areas and plenty of turnaround space from owner Centennial Industrial & Logistics for its aftermarket business.
It’s not the only company looking for new warehouse space.
CBRE’s National Industry Job Vacancy Report estimates the city’s vacancy rate fell from 2.55% to 1.55% in the six months leading up to March of this year, below average exceptionally tight national 2.24%.
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The number of empty sheds (4000 m² or more) in the popular eastern and southeastern areas of the city fell to just 1%, a record high. Just five years ago, the vacancy rate in the area was 7%.
It’s no wonder, then, that Frasers Property Industrial leased the last major component of its Braeside industrial estate to the ASX-listed marketing and communications company IVE Group.
With a final value of approximately $ 61 million, the deal involves Frasers developing and then leasing IVE a 12,755 square meter warehouse / office and 18,068 square meter print production facility. The marketing group already rents four other buildings on the Frasers estate.
Frasers South Region Manager Anthony Maugeri said the combination of tight land markets and a lack of new sheds was prompting loyal clients like IVE to take out 10- and 7-year leases.
Scania’s new operation at 40 Decco Drive in Campbellfield is in a part of the city where the vacancy rate, although higher than in the southeast, is still historically low at 2.4%.
The 10-year lease for the truck company was negotiated by CBRE agents Daniel Eramo and Joe Brzezek and Scania representative Tony Tripodi.
Historically low vacancy rates drive up rents and lower incentives.
Stephen Adgemis of CBRE said that for the first time, rents hit $ 100 per m² in the Southeast, while incentives were down from 30% a year ago to between 10 and 20%.
“This is the result of a lack of speculative development and strong demand, fueled by what is now a very strong economic sentiment,” he said.
“Even with 170,000 m² of speculative development in the works, there is a massive shortage of buildings. “
Land values have increased by 25% in less than a year, CBRE estimates.
Melbourne’s overall net absorption rate and vacancy rate are 653,365 m² and 1.55%, ahead of the rest of the country but behind Sydney’s 738,325 m² and 1.4% respectively.
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