Victoria - Market Review March 2021

Welcome to Facey Q1 2021 market update

Scarcity and pent-up demand drove commercial property to start 2021. Incentives decreasing, land rates increasing, yields compressing and investor appetite driving this curious commercial market. The changes to economic stimulus, job keeping going the way of the dodo 29th March, may cause the Victorian market to drop a gear but the forward momentum will continue.

Quality properties achieving outstanding results irrespective of the age of the asset; if its functional it’s in demand. Business investment is back and with employment levels far tighter than anticipated in mid-2020 guarantee that the market can be very positive for the remainder of the year. Vacancy levels in industrial property are low throughout metro Melbourne with record low levels in the East and the West.

The outer metro market has been interesting with developers and occupiers having to head there to secure land. So, whether it’s west, north or south east of Melbourne the surge in industrial land prices is staggering. Pakenham, an outer southeast locality, has seen an incredible March with sales in excess of $20M for zoned land!

The flight to quality should continue to be the investors motto and this is where we expect sustained strong prices being achieved. Growth in industrial rental rates for buildings ranging from 500m2 to 5,000m2 is also sure to be what we see for the next three quarters of 2021.

By Mark Bond
Facey