Industrial deals value Logis Estate land 30 per cent higher than the rest of Dandenong South

A string of industrial land deals in the past six months has shown that blocks in the Logis Estate are worth 30 per cent more than the rest of Dandenong South.

CBRE said a “two-tier” market has emerged, with Logis Estate outpacing the local area.

“CBRE has managed the sale of five Logis Estate properties ranging in size from 1361 square metres to 3252 sqm over the past six months at an average price of $1841 psm, reflecting yields of sub 5.5 per cent,” the agency’s head of Victorian Industrial, James Jorgensen, said this week.

The average price of industrial land in the wider Dandenong South area is $1417 per sqm, he added, based on four sales the agency conducted over the same time.

Logis Estate (outlined) was conceived by former land owner Melbourne Water and Development Victoria.

Outside of Melbourne’s inner city, Dandenong and Dandenong South are considered Melbourne’s most expensive industrial precincts in which to buy or rent.

Mr Jorgensen said the main driver of capital growth in Dandenong South is the increase in underlying land values, driven by the lack of supply.

“In 2015, land values were at $300 per sqm and in 2018, we saw the same size blocks sell for $600 per sqm,” the broker said. “Other forces that are driving capital values in this market are low interest rates and the fact that the industrial and logistics sector is considered a market darling amongst a range of investors – domestic, offshore, institutional and private”.

“Industrial land in Dandenong has now reached the point where it is only affordable for owner-occupiers and developers with low development margin expectations,” Mr Jorgensen said.

“Traditional developers are deterred by the lack of returns and are being forced to look for alternative sites, leading to the demand for brown field sites with large land components”.

Logis Estate

Logis Estate was conceived in 2012 by the land owner, Melbourne Water, in conjunction with the state government’s Development Victoria – when it was branded Places Victoria.

Built in seven stages on 154 hectares of re-mediated land at the south-east corner of Eastlink and the Dandenong Bypass, and also with frontage to Greens Road, the master-planned business park includes high quality and environmentally friendly low-rise commercial offices.

A soccer pitch, walking track, lake and retail precinct with cafes, also forms part of design.

Bayport built this property for Hayward Pools at Logis Estate.

The development required earthworks in-fill, stormwater outfall drainage and 25,000 sqm of infrastructure,

In 2013, the estate received a Premiers Design Award for “setting anew benchmark for high quality architecture, superior urban design, outstanding amenity and sustainability”.

“The developers forfeited profit by making sacrifices to the volume of land produced for sale in favour of incorporating park land and public open space beyond what was required, an element which now proves extremely popular with tenants,” Mr Jorgensen said.

“Seven years on, the original vision has been delivered and it is for these reasons that developers, investors, owner-occupiers and tenants choose this location above any others in the South East market”.

Colleagues Lachlan Ferguson, Ned Murphy and Tim Homes have been managing sales within the Logis Estate for 10 months.

Three of the Logis Estate assets which sold in the last six months were offloaded by a single developer: Poplar Constructions Pty Ltd, which is seeking to recycle funds for its development pipeline.

Dulux, Ego Pharmaceuticals, Hayward Pools, NSK Australia, OFE Refrigerated Transport and Shell are amongst Logis Estate’s occupiers.

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Marc Pallisco

Marc Pallisco

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

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