Victoria Commercial & Industrial Property Market Review - March 2022
It’s been pleasing to hit the ground running in 2022 with a strong number of Auction and EOI campaigns. To date all have managed to sell strongly as we’ve seen competition continue to drive great results for vendors. We are seeing confidence from both owner occupiers and investors who are prepared to dig deep to secure a suitable property in a market that remains tightly held overall.
A case in point was the recent sale of 10/9 Monterey Road in Dandenong South. The property faced some big challenges being a larger strata building that was encumbered by a lease set well below market rates. Despite these issues which would have hampered efforts in a softer market, we ended up with 16 offers by the close date with the vast majority being above vendor expectations. We finally transacted approx. 25% above our expected range proving excellent timing for our vendor.
Despite the instability in world affairs, or perhaps because of it, the appetite in the market for industrial and commercial assets remains unnerved to this point. I think the next one to two quarters will test the market’s resilience. Now is an excellent time to consider disposing of an asset while market conditions remain favourable. Ultimately the shortage of stock across all asset classes cannot be denied and may continue for some time.
To sustain the appetite from investors and developers in the short to medium term, we expect pressure on rents to continue mounting. With vacancies slim across the board, rental growth looks certain. Melbourne is well placed to absorb a lift in rental rates whilst remaining one of Australia’s most competitive rental markets.
“We are seeing confidence from both owner occupiers and investors who are prepared to dig deep to secure a suitable property in a market that remains tightly held overall.”