Melbourne Commercial & Industrial Property Market Review - March 2024
“Pricing remains stable and we are seeing the vast majority of our buyers being well-supported by the banks when investing into industrial and commercial assets.”
The new year has kicked off in a very positive manner (for the most part – back to that later). Energy levels are up, and the market feels very engaged with both sales and leasing volumes stronger than anticipated.
Some of the properties that failed to sell late last year have now transacted and it feels like there are many businesses out there looking to expand or improve efficiencies – that’s great news for our market.
Facey has a strong number of sales campaigns on the go, providing some outstanding buying opportunities, particularly for owner occupiers who have had very limited choice over the last 24 months. Pricing remains stable and we are seeing the vast majority of our buyers being well supported by the banks, when investing into industrial and commercial assets.
The leasing market remains extremely tight, with quality buildings having a short letting up period. While we felt rents may have started to plateau late in 2023, some further rental growth now looks likely and this is driven by both supply constraints, construction costs and the paragraph to follow.
The main negative aspect we are seeing on the ground here in Vic is in the area of land tax. What effect this has on the supply side of our market will be interesting to see, but this is having a serious impact on an owner’s bottom line. What will the flow on effect be? True to form, the state government haven’t thought through the unintended consequences of these taxes. Of course, costs get passed on, so pressure on rents to lift again will be on the table. Tenants who run businesses will build their extra rent into their goods and services. Consumers will ultimately bear the brunt.
This issue aside, appetite for industrial real estate remains healthy, and the resilience of this asset class should not be underestimated.
Matt O’Dea, Facey Property