This article is from the Australian Property Journal archive
A PRIVATE investor has snapped up a state-of-the-art distribution centre in Melbourne’s west for more than $20 million, at a yield of 3.3% that the selling agents say is a record yield for Victoria’s industrial and logistics market as appetite for the asset class shows no signs of abating.
The modern Derrimut building of 9,265 sqm sits on a 21,290 sqm site at 20 Calarco Drive and is occupied by Cryer Malt, the largest distributor of craft-brewing ingredients in Australia and New Zealand.
In the deal negotiated by Colliers’ Jack Kelliher, Nick Saunders and Hugh Gilbert a private buyer paid $20.85 million for the asset as a passive hold, as it was offered with a weighted average lease expiry of 9.5 years.
Kelliher said the property was snapped up prior to the sales campaign commencing, at a record price due to the quality of the asset and covenant on offer.
“The sale represents a record for the industrial and logistics sector in Victoria, as it represents the sharpest yield to date. There is insatiable demand for securely leased industrial investments that are well located within core markets throughout Victoria.”
Industrial yield compression across Melbourne has averaged 115 basis points over the past 12 months within the prime market, according to Colliers, while Cushman & Wakefield data shows prime yields in Melbourne’s dominant western industrial market firmed to 4%.
In September, Germany’s Institutional Investment Group splashed out $81.6 million for the inner Melbourne headquarters of Rathbone Wine Group on a low 3.6% yield.
“Multiple institutions put forward expressions of interest and submitted offers pre-campaign,” Kelliher said. “The asset really captured the attention of the ever-growing pool of buyers looking to invest in the industrial and logistics market.”
More than $3.5 billion worth of industrial assets traded in the Melbourne market in the first half of 2021, after nearly $2.1 billion was sold across the entirety of 2020.
Researcher Tony Crabb told Australian Property Journal‘s Talking Property podcast that underlying demand for industrial real estate will continue to increase, underpinned by e-commerce, food storage, manufacturing, last-mile logistics, and now data centres.
Drew Williams of Rutherfords Property advised the purchaser on their acquisition.
