Melbourne industrial occupier activity up 14.4% in Q1

The West precinct is driving demand in the city.

A recent JLL report reveals that industrial occupier activity in Melbourne rebounded and increased 14.4% q-o-q (397,740 sqm), continuing strong demand seen through the sector over the past two years. 

Quarterly take-up continues to sit above the 10-year quarterly average (228,470 sqm), a trend that has accelerated since the beginning of the pandemic. 

Here’s more from JLL:

The West precinct continues to drive increased demand throughout Melbourne, with total take-up at 205,690 sqm for the precinct. This remains well above the 10-year quarterly average (119,130 sqm), indicative of the elevated demand levels within the industry. There were 9 total occupier moves recorded in the West precinct in 1Q22. 

Of the occupier moves recorded this quarter, 62% of these were taken up via pre-lease while the remainder was in leases of existing assets. The precinct recorded the largest occupier move in 1Q22, where Aldi occupied 60,000 sqm at 1001 Boundary Road, Truganina. Overall, the West precinct accounted for 52% of total take-up in Melbourne for 1Q22. 

Take-up in the South East precinct was 107,530 sqm in 1Q22, substantially higher than the 94,530 sqm recorded in 4Q21. This accentuates a trend being seen not only in Melbourne, but on a national level, of highly elevated occupier activity. In isolation, take-up in the South East precinct was 66% higher than the 10-year quarterly average. Pre-leases represented 83% of the take-up in the South East for 1Q22, exemplifying the current lack of availability for existing industrial assets, as well as the highly elevated levels of demand. 

The South East precinct recorded the 2nd and 3rd largest occupier moves this quarter, with Early Settler (furniture retailer) occupying 37,890 sqm in Keysborough, and CEVA logistics occupying 35,882 sqm in Cranbourne West. In total, the South East precinct accounted for 27% of takeup for the quarter. 

Take-up in the North precinct, while elevated relative to long term averages, decreased q-o-q to 84,520 sqm. This is still nearly double the 10-year quarterly average (42,650 sqm). There was no pre-lease activity recorded in the North precinct for the quarter, as all occupier activity was in existing assets. The largest occupier move recorded in the North precinct was a 21,370 lease by an undisclosed tenant at Dexus’ 19 Innovation Drive.