, Australia
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Melbourne industrial sale transactions down 23% to AUD481.9m in Q1

But this is still 43% above the 10-year quarterly average.

Activity in Melbourne’s occupier markets has continued to accelerate in 1Q21, reaching a new historic benchmark for a second consecutive quarter, according to JLL. Gross take-up totalled 546,940 sqm this quarter, outperforming the previous record (470,230 sqm) from 4Q20. As such, Melbourne has accounted for 44% of national takeup over the last 12 months. 

Here’s more from JLL:

Supply delivery slowed this quarter, however remained slightly above the long term average and was the highest of any market. The impacts of the pandemic and the associated restrictions have slowed or delayed some developments, and as such all four projects which completed this quarter (125,660 sqm) were fully pre-committed. 

Continued investor demand for income producing assets in the industrial sector continues to place pressure on pricing for prime assets. Melbourne’s average prime yield midpoint sharpened by 25 basis points, to a new record low of 4.31%. 

AUD 481.9 million of industrial sale transactions (≥ AUD 5.0 million) occurred in 1Q21. This was a decline of 23% on totals in 4Q20, but remained 43% above the 10-year quarterly average.

Other key figures:

2.7% Melbourne South East prime annual rental growth: Consistently elevated industrial occupier activity has started to place pressure on rental values across a number of precincts in Melbourne. This has pushed the whole-market average prime rental rate by 1.0% in the last 12 months.

1,555,580 sqm Gross take-up: Gross take-up in the Melbourne industrial market continues to outperform the 10-year average, with over 1.5 million sqm recorded since 2Q20. Demand has been led by the Transport, Postal and Warehousing sector, which accounted for 36% of overall gross take-up over the last 12 months.

4.00%– 4.50% Melbourne West prime yield range: Prime yields have compressed over the last 12 months across all precincts, with midpoints coming in by 75bps across the three major precincts. Secondary yields have followed suit, compressing by up to 125bps in the North.

642,040 sqm Under construction: As at 1Q21,we are tracking over 640,000 sqn of stock which is under construction. Most of that stock (97%) is due for completion in 2021, with the balance to be delivered in 2022.Based on the current forecast, 2021 will be the highest year for asset completions that JLL Research has recorded.

 

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