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Melbourne industrial research forecast report second half 2012


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  • 1. SECOND HALF 2012 | INDUSTRIAL RESEARCH & FORECAST REPORT MELBOURNE INDUSTRIAL Robust Market Prevails Due to Shortage of Prime Space The Melbourne industrial market has remained steady over the six months to October 2012 due largely to the market’s tightly held structure. Over 600,000m2 of industrial space has been leased in buildings over 3,000m2 the past 12 months, with approximately 62% of this space being leased over the first half of the period and the remaining 38% over the past six months. The West represented 41% of the space leased over the past six months while the North and South East each represented 24% of the total space respectively. 12-18 Distribution Drive, Truganina Purchased by Dexus in joint venture with the Korean There has been continued evidence of a shortage of prime space in the Melbourne industrial National Pension Service for $50 million. market which has led to an increase in take up in secondary grade stock. The space shortage has led to an overall increase in the amount of speculative development in the market, which comprises MARKET INDICATORS FORECAST - 6 MONTHS approximately 52% of the 63,690m2 of space currently in the development pipeline. Net face rents remained stable across most markets over the past six months. Prime grade OVERALL PERFORMANCE incentives too remained stable in most regions, except for the West and the South East. The South NEW SUPPLY / East saw a slight reduction in incentives, due to the reduction in available stock, while the West saw a slight increase in incentives. TENANT DEMAND / Limited amounts of quality stock have been brought to the market over the past 12 months, leading INCENTIVES / to an overall decline in volume and value of total sales figures, however this has led to an increase in capital values. Between April 2012 and September 2012 six transactions were recorded totalling FACE RENTS just under $134 million, as opposed to the eight transactions totalling $145 million recorded between October 2011 and March 2012. This reflects a decrease of 25% in total sales volume but only an CAPITAL VALUES 8% decrease in total sales figures. YIELDS Melbourne’s industrial land market has picked up over the past six months after a period of minimal activity. Both owner-occupiers and developers have come back to the market and approximately LAND VALUES 90 hectares have transacted as a result. MELBOURNE INDUSTRIAL MARKET INDICATORS KEY HIGHLIGHTS Average Net Average Average Capital Average Market Average Land Region Grade Face Rents • ncreased activity from institutions and I Incentives Value ($/sq m) Yield* Values ($/sq m pa) emerging offshore groups looking for large scale, income producing assets. LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH • he industrial land market has seen T Prime $130 $170 10% 15% $2,000 $3,000 7.75% 8.25% City Fringe $600 $750 approximately 90 hectares of land transact Secondary $80 $90 12% 18% $1,000 $2,000 9.00% 10.00% over the last six months. Prime $80 $90 8% 10% $1,100 $1,200 7.75% 8.25% • et face rents have remained stable across N Outer East $220 $275 Secondary $65 $70 10% 12% $900 $1,000 9.50% 10.00% most regions in the market. Prime $80 $90 8% 10% $950 $1,100 7.75% 8.25% South East $175 $250 Secondary $50 $60 12% 17% $650 $750 9.50% 10.50% Prime $65 $85 8% 10% $1,000 $1,100 8.00% 8.50% North $165 $280 Secondary $50 $65 10% 17% $800 $850 10.00% 11.00% Prime $70 $75 10% 20% $875 $1,000 7.75% 8.25% West $110 $185 Secondary $50 $55 10% 15% $650 $750 9.50% 10.50% Figures as of Q3 2012 *Equivalent Reversionary Yield Source: Colliers International Research
  • 2. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE Economic Update SOLID NATIONAL ECONOMIC GROWTH The June Quarter 2012 ABS Gross Domestic Product (GDP) data, showed in seasonally adjusted terms, GDP increased 0.6% during Q2 2012. Although slower than the strong result of 1.4% in Q1 2012, through-the-year GDP growth was a solid 3.7%. Deloitte Access Economics expect annual GDP growth to be 3.0% in 2012-13 and to rise to 3.4% in 2013-14 before easing to 3.3% in 2014-15. UNEMPLOYMENT RATE STEADIES AS JOBS GROWTH DISAPPEARS The unemployment rate remains at the healthy level of 5.2% (trend) where it has settled over the past four months. However, monthly full-time jobs growth has disappeared. August full-time jobs data shows there was a contraction (600) in the number of jobs. Over the 12 months to August 2012, full-time employment actually increased by 27,900 jobs and while this is the largest increase over a 12 month period since October 2011 it is well below trend. The ANZ Job Advertisement Series showed that number of job advertisements fell 2.3% in August after falling 0.8% in July to become the fifth consecutive monthly fall. CONSUMER PRICES SETTLE The latest inflation data from the Australian Bureau of Statistics (ABS) shows that annual headline inflation rose just 1.2% during the 12 months to June 2012, down compared with a rise of 1.6% through the year to March 2012. This saw the Consumer Price Index (CPI) grow by 0.5% during the quarter and ensures that the inflation rate remains well below the RBA’s target range of 2% to 3%. INTEREST RATES STEADY Enough evidence showing that the national economy is growing at around trend without excessive inflationary pressures convinced the RBA Board to keep the official cash rate at 3.25% in November. The Bank pointed out that further effects of actions already taken to ease monetary policy can be expected over time. THE AUSTRALIAN DOLLAR After fluctuating around parity with the $US over the first half of 2012, the recent round of quantitative easing (QE3) announced by the US Federal Reserve has been accompanied by trade in the Australian Dollar at between $US1.02 and $US1.03. MELBOURNE INDUSTRIAL MARKETS Cragieburn Somerton Campbellfield Thomastown Broadmeadows North Bundoora Heidelberg Coburg d oa Wes gR tern Rin Hig hw ay tern es W Sunshine Footscray Clifton Hill Eastern Freeway Derrimut Eastern Freewa Melbourne CBD y Laverton North West ay City Fringe Abbotsford Croydon Outer ew Fre es nc Pri Richmond Burw ood Ro East Altona North Port Melbourne ad 10 km Bayswater Mo na sh Eastlink Fre ew Nep ay ean Pr in Hig ce Scoresby s hw Hig Clayton 20 ay hw South ay km East Mulgrave Springvale 30 Dandenong km Braeside Hallam Lyndhurst Frankston COLLIERS INTERNATIONAL | P. 2
  • 3. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNEKey Market IndicatorsGROSS STATE PRODUCT AUSTRALIAN GDP AND VICTORIAN GSP• National Gross Domestic Product (GDP) was 2.1% in 2011. 4.0%• GDPgrowth of 3.7% forecast for 2012 and is Forecast forecast to go to 32.9% in 2013. 3.5%• Victoria Gross State Product (GSP) was 2.4% 3.0% in 2011, similar to 2.4% in 2010. 2.5%• GSPof 2.7% is forecast for 2012 and 2.2% 2.0% in 2013. 1.5% 1.0% 0.5% 0.0% 2009 2010 2011 2012 2013 2014 Victoria Australia Source: Deloitte Access Economics / Colliers International ResearchINDUSTRIAL CONSTRUCTION START AUSTRALIAN AND VICTORIAN INDUSTRIAL PRODUCTION• According to Cordells there is currently 303,698m2 of industrial space in some stage 160,000 of development in Melbourne.• The 140,000 majority of space in the pipeline is already under construction (276,328m2) with 120,000 completion dates anticipated between 100,000 December 2012 and September 2014. 80,000• There is only 36,521m2 of space with development approval and a further 10,000m2 60,000 of space in stages preceding development 40,000 approval. 20,000 0 Development Approval Contract Let Construction Source: Cordells / Colliers International ResearchCONTAINER TRADE CONTAINER TRADE - PORT OF MELBOURNE• The chart on the right indicates international 1200 container movements at the Port of Melbourne, accounting for loaded containers only. 1000• Container exportshave been relatively stable over the past 5 years, ranging between 800 500,000 and 600,000 TEUs (20ft equivalent units) 600• In the 12 months to August 2012, container exports were 658,926 TEUs and container 400 imports were 1,046,348 TEUs. 200 0 Aug 2006 Aug 2007 Aug 2008 Aug 2009 Aug 2010 Aug 2011 Aug 2012 Import Export Source: Port Of Melbourne/ BITRE / Colliers International Research COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE City Fringe NO NEW SUPPLY LAND VALUES INCREASE • There is no new major supply being planned • Land values have increased over the past six or under construction in Port Melbourne to months, currently ranging between $600/m² be completed 2012 and 2013. and $750/m², or an average of $675/m². • Tenant demand in Port Melbourne has This is anticipated to be caused by two factors: decreased with only two leases totalling - The shortage of land available within the 4,138m² transacting between April and City Fringe precinct; much of which is September 2012. being purchased for mixed use and • During the six months to March 2012, there residential development rather than for210 Lorimer Street, Port Melbourne were three major lease transactions totalling industrial use.1,242m2 recently leased to the Buchanan Group ata rent of $149/m2 pa. 16,375m² in Port Melbourne. - The availability of financing and lending • Leasingactivity included a lease by KONE which has remained tight over the past Elevator Party Limited for units 12 and 13 18 months. on  Bridge Road totalling 2,896m2. • Primegrade average net face rents increased slightly now ranging from $130 to $170/m² while incentives remained stable in a range from 10% to 15%. • Secondary grade rents and incentives have been stable over the past 12 months; rents ranging from $80 to $90/m² with average incentives to range from 12% to 18%. CAPITAL VALUES STABLE WHILE YIELDS RELAX • Capital values for prime grade industrial properties in Port Melbourne remained stable. Capital values currently range between $2,000/m² and $3,000/m². • Average capital values for secondary grade industrial properties also remained stable over the six months to March 2012. It currently ranges between $1,000/m² and $2,000/m². • Averagemarket yields for prime grade properties relaxed over the six months to October 2012. It currently ranges between 7.75% and 8.25%. • Averagemarket yields for secondary grade properties remained stable to October 2012 and currently range from 9% and 10%. COLLIERS INTERNATIONAL | P. 4
  • 5. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE East LIMITED NEW SUPPLY CAPITAL VALUES YIELDS • Only one new building was completed REMAINED STABLE between March 2012 and October 2012 with • Averagecapital values for prime grade 5,176m² comprising of 18 units. industrial properties remained stable at an • Four new buildings are currently under average of $1,150/m² in October 2012. construction and will deliver approximately It currently ranges between $1,100 - 12,144m² to the market upon completion $1,200/m².35 Centre Road, Scoresby during Q4 2012. • Averagecapital values for secondary grade11,322 m2 recently leased to Heat Group at a rent industrial properties remained stable at an • Currently there is a shortage of existingof $79/m2 pa. prime grade stock available for lease. average of $950/m² in October 2012. • Averagemarket yields for prime properties • Tenantdemand in the East increased over the six months period to October 2012 with decreased over the six months to October approximately 29,700m² being leased. 2012, while secondary properties remained stable. Prime yields currently range between • The largest lease signed during the last six 7.75% and 8.25%; secondary yields currently months was that of 35 Centre Road, range between 9.75% and 10.50%. Scoresby which saw 11,322m² of space taken up by Heat Group. • Shortage of vacant prime grade stock LAND VALUES REMAINED STABLE available for lease in the market has seen an • Verylimited land sales in the region have increase in pre-commitment enquiry level. seen land values in March 2012 remain • Over the last six months, similar to the South unchanged at an average of $248/m². East region there has been an increase in It currently ranges between $220/m² and secondary grade stock available for lease. $275/m². PRIME GRADE NET FACE RENTS INCREASED • Primegrade net face rents in the East increased over the past six months to range from $80 to $90/m² and secondary grade net face rents remained stable and are currently ranging from $65 to $70/m². • Incentives remained stable across all grades over the past six months, with prime grade incentives ranging from 8% to 10%. • Secondary grade incentives currently range from 10% to 12%. COLLIERS INTERNATIONAL | P. 5
  • 6. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE South East LEASING MARKET REMAINS TIGHT LACK OF PRIME GRADE • A lack of new development activity and STOCK FOR SALE ongoing strong tenant demand has led to an • Currentlythere is a shortage of prime grade under supply of large prime grade industrial stock available for sale. Enquiry levels remain space available for lease in the South East. strong from buyers looking to purchase good • Seven new buildings were completed with quality stock. Prime grade yields and capital approximately 46,000m² of space during the values remained strong. Average yields2-20 McDonalds Lane, Mulgrave last six months. Approximately 83% of the currently range from 7.75% to 8.25% and8,800m² recently leased to Couriers Please space completed is already pre-committed. capital values remained stable at $950 toat $82/m2 pa. $1,100/m². • Approximately26,000m² of space is under • Average secondary grade capital values construction, due for completion in Q4 2012 and 2013. Approximately 41% of the space softened over the past six months and range under construction is already pre-committed. between $650 to $750/m². • Averagesecondary yields have remained • Consolidation and business expansion have been the main drivers for strong leasing stable over the six months to October 2012. market in the region. Secondary yields range between 9.50% and 10.50%. • Tenant demand in the South East remained strong with approximately 94,702m² leased between March 2012 and October 2012. LAND SALES REMAINED SUBDUED • The largest lease signed during the last six • Theland market has continued to see low months was that of 80-96 South Park Drive, levels of vacant land sale transactions over Dandenong South which saw 10,000m² of the last six months. space leased by Shriro Australia. • Landvalues have remained stable over the • Overthe last six months, there has been an last six months to October 2012, at an increase in secondary grade stock available average of $213/m². Land values currently for lease. ranges between $175/m² and $250/m². • Pre-lease enquiry remains strong due to limited quality stock available for lease. • Primegrade rents remained stable over the past six months and now range between $80 - $90 /m² pa. Prime grade incentives relaxed over the past six months and are now ranging from 8% to 12%. • Secondarygrade net face rents softened over the past six months and now range from $50 to $60/m² pa. • Incentives for secondary properties also increased and are now ranging between 12% and 17%. COLLIERS INTERNATIONAL | P. 6
  • 7. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE North STRONG TENANT DEMAND LAND SALES ACTIVTY IMPROVED • Tenant demand remained strong with • Over the last six months there has been 12 tenants taking up 55,000m² between strong demand from local developers and April 2012 and September 2012. owner occupiers for land. • Vacancyrates for buildings over 3,000m² • Land values increased over the past six remain low with only 52,700m² of space months increasing from $165/m² - $265/m² currently available in the northern in March 2012 to $165/m² - $280/m² in410 Coopers Street, Epping industrial market. October 2012.Sold for $5.5 million • Constructionactivity is limited however the • Two major land sales over the last six increasing tenant demand for stock over months included: 3,000m², which dominates the market along • 410Cooper Street, Epping – A 32 ha site with shortage of available stock should sold for $5.5 million achieving a land value create more prelease opportunities such as of $17.18/m²; and the recently concluded prelease deals at • 135Donnybrook Road, Mickleham – A 144 ha Melbourne Airport including: site purchased by Australian Government for • Borders Express committed to a new $40 million at $27.77/m². The land will be premises at Melbourne Airport with home to Australia’s new $400 million state construction recently commencing and of the art quarantine centre post entry completion due in March 2013; and quarantine (PEQ) facility. • Fellowescommitting to a 7,383m² building • Thesmaller retail industrial blocks continue recently completed at Melbourne Airport. to trade well with only two remaining lots available within Meridian Business Park. RENTS AND INCENTIVES REMAIN STABLE • Primegrade average net face rents increased slightly and now range from $65 to $85/m² pa. • Averageincentives for Prime grade properties remained stable 8% to 10% in October 2012. • Secondaryrents remained in a range from $50 to $65/m² over the last six months, with average incentives ranging from 10% to 17%. CAPITAL VALUES AND YIELDS STEADY • Over the past six months only one transaction over the $5 million category was noted. 103-121 Western Avenue, Tullamarine was sold for $7.31 million. • Average capital values for prime and secondary industrial properties remained stable in October 2012 at $1,050/m² for prime grade properties and $825/m² for secondary grade properties. • Prime grade yields decreased over the half and now range between 8.00% and 8.50%; secondary grade yields remained stable ranging between 10.00% and 11.00%. COLLIERS INTERNATIONAL | P. 7
  • 8. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE West STRONG TENANT DEMAND CONTINUES PRIME GRADE CAPITAL VALUES • The West continues to remain Melbourne’s INCREASED best performing region. • There were three major investment grade • Majorspeculative development activity in transactions over $5 million during the past the West has slowed the pre-commitment six months totalling $101.35 million. activity during 2012. • Threesignificant vacant possession sales • Onerecent trend is larger tenants with were concluded in 2012, totalling 33,219m²364-426 Old Geelong Road, Hoppers Crossing in comparison with no major sales reported requirements above 10,000m² for primePurchased by Charter Hall for $39.35 million. during 2011 due to lack of stock and grade stock are absorbing speculative developments instead of pre-committing financing issues. for new space. • Private Investors in the $5 million plus • Leasing activity remained strong market continue to dominate the investment between March 2012 and October 2012 sales market. where 14 major leases were signed, • Owneroccupiers are starting to enter totalling 133,325m². the market. • Tenant enquiry level remains strong in the • Major transactions included the sale of region with approximately 250,000m² in the 12-18 Distribution Drive, Truganina market for mid to long term. ($50million) and 364-426 Old Geelong Road, • Four speculative buildings were completed Hoppers Crossing ($39.35 million). between March 2012 and October 2012, • Primegrade capital values increased over adding 25,179m² to the region. the past six months with values ranging from • Three new buildings are currently under $875 to $1,000/m² while yields remained construction which will add 25,106m² by stable ranging from 8.00% to 8.50%. December 2012. All four buildings currently • Secondarygrade space has seen capital under construction are Speculative values and yields remain stable at 9.50% to developments. 10.50% while capital values currently range • During2013, there is a potential oversupply from $650 to $750/m². of existing properties in excess of 10,000m². LAND VALUES SOFTENED RENTS INCENTIVES MARGINALLY • Landsales over the last two years have • Primegrade average net face rents remained stable and continue to range from $70 to been subdued. During 2012, there has $75/m² with incentives increasing marginally been an improvement in enquiry levels in and currently range from 10% to 20%. the land market. This increase in activity have been driven by a number of key factors, • Secondary grade average net face rents and namely; improving confidence from both incentives remained stable and currently developers and occupiers, realistic pricing range from $50 to $55/m² with average from vendors and a lack of supply of built incentives ranging from 10% to 15%. product in the market. • Land values have softened slightly from March 2012 to October 2012. It currently ranges between $110/m² and $185/m², as opposed to a range of $120/m² to $185/m² in March 2012. COLLIERS INTERNATIONAL | P. 8
  • 9. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNENew Supply Pipeline DEVELOPMENT UPDATE Estimated Address Suburb Total Area (m²) Status Comments Completion Date Outer East Eastern Business Park, 88 Speculative Development, 18 units Croydon South 5,176 Complete Q2 2012 Merrindale Drive Stage 2 (9 out of an 18-unit development) 38 Corporate Boulevard Bayswater 2,217 Under Construction Q4 2012 Developer: Encapsa 88 Merrindale Drive Croydon 4,043 Under Construction Q4 2012 Speculative Development, 18 units 184 Chesterville Road Moorabbin 3,874 Under Construction Q4 2012 Speculative Development, 15 units 1154 Burwood Highway Ferntree Gully 2,010 Under Construction Q4 2012 Speculative Development, 7 Office Showrooms 19 Cornhill Street - Stage 2 Ferntree Gully 5,321 DA Approved Developed by DMV Developments South East 6-8 Railway Avenue Oakleigh 2,000 Under Construction Q4 2012 Speculative Development, 12 units 36 Bessemer Drive Dandenong South 4,000 Complete  Q4 2012 Lot 35 Bessemer Drive Dandenong South 2,500 DA Approved Q1 2012 Lot 31 Bessemer Drive Dandenong 2,392 Under Construction Lot 30 Crompton Way Dandenong 4,688 DA Approved Q1 2013 Lot 4 Produce Drive Dandenong South 4,000 Complete Q4 2012 Speculative Development Colemans Road Dandenong South 12,000 Complete Q4 2012 Pre-committed by Whitewires Lot 39 Pacific Drive Keysborough 1,903 Under Construction Q4 2012 Lot 40 Pacific Drive Keysborough 2,077 Under Construction M1, Monash Drive Dandenong South 7,500 Complete Q4 2012 Pre-committed by Pentair 469-491 Frankston Dandenong Road Dandenong South 7,500 Complete Q4 2012 Pre-committed by Heritage Seeds Factory 1, 13 Advantage Drive Dandenong 4,000 Under Construction Q4 2012 Speculative Development The Key, Lot 15 Atlantic Drive Keysborough 7,000 Complete Q4 2012 Pre-committed by Romak Logis South, Bessemer Drive Dandenong South 4,000 Complete Q4 2012 Pre-committed by Ironman Lot 9 Arkwright Drive Dandenong South 5,175 Under Construction 158-194 Abbotts Road Dandenong South 10,372 DA Approved 2013 Pre-committed by Parker, Dexion Lot 1 - 6 Lecton Drive Dandenong South 22,100 DA Approved Lot 10 Lecton Drive Dandenong 22,590 DA Approved   Speculative Development 10 Austral Place Hallam 1,529 DA Approved 3-4 Anzed Court Mulgrave 1,985 Under Construction 2013 Speculative Development, 5 units 236-246 Governor Road Braeside 6,908 Under Construction 2013 Speculative Development Lot H - Arkwright Drive Dandenong South 7,956 DA Approved Q2 2012 Pre-committed by Marine Power International 2 Bessemer Drive Dandenong South 2,392 DA Approved Q3 2012 Speculative Development 10 Miles Street Mulgrave 3,184 DA Approved Q4 2012 Speculative Development North 4 lots in Stage 1 available, Stage 2 now fully serviced and have Northpoint Enterprise Park Epping Planned been released Stage 1 available, land options from 3,000 m² to over 10 ha, Mickleham Business Park Mickleham Planned pending pre-commitment Amaroo Business Park Craigieburn Planned Lots range from 9,700 m² to 50,000 m², pending pre-commitment Merrifield Mikelham Planned Total land of 420 Ha, awaiting pre-commitment West 1/8 Weddel Court Laverton North 3,100 Complete Q2 2012 Speculative Development 2/8 Weddel Court Laverton North 3,250 Complete Q2 2012 Speculative Development 3/8 Weddel Court Laverton North 3,300 Complete Q2 2012 Speculative Development 29-31 Jessica Way Truganina 3,300 Under Construction Q4 2012 Speculative Development 128 Swann Drive Derrimut 7,766 Under Construction Q2 2012 Speculative Development Lot 2 Distribution Drive Laverton North 15,529 Complete Q2 2012 Speculative Development Drake Boulevard Speculative Altona 14,040 Under Construction Q4 2012 Speculative Development DevelopmentSource: Colliers International Research COLLIERS INTERNATIONAL | P. 9
  • 10. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNERecent Market Transaction Activity LEASING ACTIVITY Address Suburb Start Date Size (m²) Net Face Rents ($/m²) Tenant City Fringe Units 12 13 Bridge Road Port Melbourne Jun-12 2,896 $160 KONE Elevators Pty. Ltd. 210 Lorimer Street Port Melbourne Sep-12 1,242 $149 Buchanan Group Outer East 35 Centre Road Scoresby Sep-12 11,322 $79 Heat Group 32-40 Garden Street Kilsyth May-12 10,647 $128 Radio Frequency Systems 6 Expo Court Mount Waverley May-12 1,800 $83 Private 6 Dalmore Drive Scoresby Aug-12 5,964 $82 MacDonald Johnston Inner East 14-17 Dansu Court Hallam Feb-12 15,727 $80 GM 5B, 28-30 Green Street Doveton Apr-12 3,279 $52 Adidem Group 6 Garden Boulevard Dingley Apr-12 4,353 $70 Dyanmic Direct 926 Mountain Highway Boronia Apr-12 3,471 $87 Phoenix Tapware 1/14 Monterey Court Dandenong May-12 5,670 $70 Tasman Logistics 37-41 Fireways Blvd Keysborough Aug-12 2,500 $82 Sika Australia 2-20 McDonalds Lane Mulgrave Sep-12 8,800 $82 Couriers Please 4 Miles Street Mulgrave Jun-12 1,040 $149 Millenium Signs 80-96 South Park Drive Dandenong South Apr-12 10,000 $70 Shriro Australia 37 Conquest Way Hallam Jun-12 15,333 NA Undisclosed 106 Fairbank Road Clayton South Aug-12 9,601 $36 Furniture Bedding 2 National Drive Dandenong South Sep-12 5,850 $71 Utility Asset Management 134-140 Atlantic Drive Keysborough Aug-12 3,855 $86 RC Waves 215 Browns Road Noble Park Aug-12 3,600 Tomax Logistics 11 Network Drive Carrum Downs Jun-12 1,623 $100 Conveyer Pulleys Australia North 32 Mc Gregors Drive Keilor Park Aug-12 1,530 $85 Osmoflo 159 Bamfield Road Heidelberg West Aug-12 2,024 $80 Partos Plus 117 Bamfield Road Heidelberg West Jun-12 3,735 $107 Chocolatier Australia 12 Brand Drive Thomastown Jun-12 2,130 $85 LED Technologies 30 Brand Drive Thomastown May-12 3,176 $57 Cabrini Health 15 Berwick Road Campbellfield May-12 4,048 $47 Marino Brothers Transport Metrolink Business Park Campbellfield Aug-12 1,500 NA Federation Logistics 42 McIntosh Street Airport West Apr-12 1,169 $64 AM Metal Solutions 225 227 Bary Road Campbellfield Apr-12 5,913 $50 Precision Mail Melbourne Airport Tullamarine Sep-12 18,975 $65 Borders Express (Pre-commitment) Melbourne Airport Tullamarine Sep-12 7,383 $65 Fellowes (pre-commitment) 153 Barry Road Campbellfield Apr-12 3,810 $92 Jemena West Leo Court Derrimut Apr-12 9,960 Undisclosed Australia Post 445-469 Grieve Parade Altona North Feb-12 18,816 $65 Toll In 2 Store 48-52 Slough Road Altona Apr-12 3,189 $50 Knauf Plasterboard 21-23 Agosta Drive Laverton North Derrimut Apr-12 4,071 $65 Clemenger Freight Lot 2 Distribution Drive Laverton North Sep-12 15,529 Undisclosed ACFS 50 Cyanamid Street Laverton North May-12 5,500 $65 T2 148 Paramount Boulevard Derrimut Jul-12 3,238 $85 Probitoec 2-8 Oxford Road Laverton North Sep-12 13,750 $42 Premium Oz 1/8 Weddell Court Laverton North Sep-12 3,300 Undisclosed Electrix 128 Swann Drive Derrimut Oct-12 7,766 $86 Cope Sensitive Freight Olympia Street Tottenham Oct-12 15,250 $53 ACFS 24 Little Boundary Road Laverton North Oct-12 4,080 $60 Ennesty Energy 1-11 Andretti Court Truganina Sep-12 26,376 Undisclosed Catch of the Day 1 Cawley Road Brooklyn Sep-12 2,500 $62 Australian Temporary FencingSource: Colliers International Research COLLIERS INTERNATIONAL | P. 10
  • 11. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNERecent Market Transaction Activity INVESTMENT SALES ACTIVITY Area Capital Value Passing Address Suburb Sale Date Sale Price Vendor Purchaser (m²) ($/m²) Yield* City Fringe 134-150 Buckhurst Street South Melbourne Aug-12 $11,000,000 5,400 $2,037 Private Investor West 364-426 Old Geelong Road Hoppers Crossing May-12 $39,350,000 52,612 $748 8.07% Cromwell Charter Hall AMP Capital Dexus 12-18 Distribution Drive Truganina Aug-12 $50,000,000 42,954 $1,164 9.00% Investors Korean National Pension Service 99-103 William Angliss Drive Laverton North Jul-12 $12,000,000 6,554 $1,831 15.50% APGF Black Star Investments North 103-121 Western Avenue Tullamarine May-12 $7,312,000 6,117 $1,195 10.43% PEET Limited Private Investor South East 72-96 Station Street Nunawading Aug-12 $18,450,000 22,541 $819 8.10% Aspen Private Investor C3, 621 Whitehorse Road Mitcham Jun-12 $6,700,000 3,688 $1,817 8.72% Private Private Investor* Exchange Date** Equivalent Reversionary YieldSource: Colliers International ResearchInfrastructure Update INFRASTRUCTURE UPDATE Infrastructure Project Location Status Estimated Completion Date Comments Road Work on the Peninsula’s largest infrastructure project commenced in early 2010 and is expected to be completed in early 2013. 27 km Under Peninsula Link Frankston to Mornington Peninsula Q1 2013 of freeway standard road. The $759 million Peninsula Link project Construction will bring many benefits to people living in and visiting Frankston and the Mornington Peninsula. $2.25 billion upgrade, jointly funded by the state and federal gov- ernments, to include widening and improvements. The upgrade is being completed in sections, with the most congested sections Under and those with the worst safety record being worked on first. M80 Ring Road Upgrade Edgars Road to Plenty Road Q2 2014 (Phase 1) ConstructionSource: Colliers International Research, VicRoads, State Government of Victoria COLLIERS INTERNATIONAL | P. 11
  • 12. RESEARCH FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNEOutlook 522 offices inOn the back of expectations of consistent tenant demand for prime grade space and limitedavailability of such stock, the Melbourne prime grade industrial market is predicted to remain 62 countries ontight over the short to medium term. In the wake of this Colliers International anticipates thatthere will be a continued absorption of secondary stock as tenants are pressed to find elite 6 continentsnew space. Rents are expected to remain stable in both prime grade and secondary grade United States: 147markets over the next 12 months. Canada: 37 Latin America: 19The amount of speculative developments has continued to diminish over the past six months Asia Pacific: 201and this trend is projected to continue as many developers need to wait for pre-commitments EMEA: 118before obtaining finance to commence construction on new developments. This will result in a • $1.8 billion in annual revenuecontinuation of limited supply over the next 12 months within this tightly held market. • 1.25 billion square feet underLack of quality stock available for sale in the Melbourne industrial investment sales market, managementcoupled with an increased demand from investors, is expected to continue in the short to • Over 12,300 professionalsmedium term. This is anticipated to create further yield compression and higher capital valuesfor this asset class over 2013. Due to the compression in yields Colliers International expectsthe secondary grade market will come to the forefront over 2013 as investors will look topurchase secondary grade stock containing core property fundamentals with a more COLLIERS INTERNATIONALreasonable yield. Level 32, 367 Collins Street, Melbourne VIC 3000 TEL 03 9629 8888 FAX 03 9629 4945 RESEARCHER Amita Mehrotra Manager/Research TEL 03 9940 7213 FAX 03 9092 1413 Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. COPYRIGHT - Colliers International 2012. Accelerating success. COLLIERS INTERNATIONAL | | P. 12 COLLIERS