Off-market deal sees owner-occupier buy Altona factory for $18 million

A 17,000 square metre warehouse occupies part of the 9.4 hectare block.

An owner-occupier in the furniture storage business is paying $18 million for a warehouse on an enormous block, in Altona, in Melbourne’s south-west.

The buyer is already based in the area.

JLL’s Matt Crofts and Matt Ellis began an off-market campaign for the 9.4 hectare holding at 441-459 Kororoit Creek Road about six months ago.

Improvements include a 17,000 square metre warehouse, 500 sqm office and two hectares of dedicated hardstand.

A vacant portion of the site can be developed. As such the site was marketed to builders as well as investors and owner-occupiers.

The property includes a 500 square metre office and car park. A portion of the site also has the potential to be redeveloped.

The sale price values each square metre of land at $191, which is considered high for the suburb, about 13 kilometres from the Melbourne CBD.

“With land prices in Truganina, Derrimut, Laverton North increasing significantly in the last 12 months, we are observing owner occupiers which would traditionally seek a turnkey or Design & Construct development, searching for infill sites closer to the CBD and Port with older style warehousing” Matt Crofts said.

Melbourne’s western suburbs, particularly Altona, is attractive for its proximity to the CBD and Westgate tunnel project, due for completion in 2022, making the Port of Melbourne more accessible, Mr Crofts added.

“Owner occupier demand in the inner western market has increased dramatically due to the lack of land supply across the Western Market” Danielle Tadi head of Middle Markets for JLL, said.

Industrial land lots in Williams Point – a business park being created in Williamstown North – sold for an average rate of $600 per sqm, according to Ms Tadi.

The Williams Point expressions of interest campaign resulted in the sell-out of stages one and two, totalling 60 lots, which set a record-breaking achievement in the Western market, the broker added.

Prices on some blocks reached a height of $630 per sqm. The third release of land within Williams Point is scheduled for early next year, Ms Tadi said.

 

Other industrial sales to owner-occupiers

The deal at 441-459 Kororoit Creek Road, Altona, is the latest in a string to Melbourne industrial owner-occupiers.

Two weeks ago we reported that an owner-occupier was paying the Schot family about $5.8 million for a warehouse in Clifton Hill in Melbourne’s inner north-east.

Last month we reported that an another outlaid $10 million for an industrial site in Dandenong South near a premises it occupied.

In October, sheet metal producer Design Group Limited spent $7 million on a Laverton North factory, while an office in Rowville sold to a business which plans to occupy.

However, occupants have still been active in the western suburb leasing market

According to Annabel McFarlane, JLL researcher, a number of pre-lease transactions have been struck this year, including these in Truganina:

• Woolworths (32,600 sqm) – within the Drystone Industrial Estate in Dohertys Road, owned by Charter Hall; • CS Logistics (18,210 sqm) at the West Industry Park at 66 Dunmore Drive; and • Scalzo Foods (5,930 sqm) and Specialized Australasia (5,530 sqm) at the Westside industrial estate at Infinity Drive, which is owned by Goodman Properties Australia).

In Derrimut, Kuehne + Nagal committed to an 8000 sqm design and construct extension project.

 

A JLL graph showing Melbourne western suburb industrial land value averages over time.

Shortage of serviced land starting impacting western industrial values three years ago

JLL said the shortage of serviced land started impacting industrial land values in Melbourne’s west three years ago.

“Over the last year average land values for 2.5-hectare lots have increased by 48 per cent,” Ms McFarlane said.

“Take-up in the new build space has accounted for 31 of take-up in Melbourne’s industrial market (741,270 sqm as at 3Q, 2018) since the beginning of the year.

“Altona’s typically achieves land rates 15-20% higher than land values in other industrial precincts in Melbourne’s west and as city fringe areas increasingly gentrify, Altona is well positioned with closeness to the CBD, road networks and the port.

“In addition, the population of the West of Melbourne Region is projected to increase by 120% (approximately 900,000 people) over the next 30 years as Australia’s fast-growing region”.

Marc Pallisco

A freelance property writer and analyst, Marc is a co-founder of realestatesource.com.au.

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