This article is from the Australian Property Journal archive
AN industrial property in Melbourne’s inner west has been snapped up by an owner occupier for $11.5 million as tenants increasingly look at purchasing their own premises rather than continue renting.
The property at 41 Strzelecki Avenue is a 12,225 sqm site improved by two warehouse and office buildings with dual street frontages to Strzelecki Avenue and Diamond Drive, a crossover and drive-through accessibility, minimum height clearance of six metres and ample hardstand.
In total, the buildings have 5,778 sqm of net lettable area, with both buildings currently tenanted returning $506,000 per year.
The sale reflected an initial yield of 4.4%.
Joel Davy and Scott Braithwaite of Knight Frank negotiated the deal for a private investor.
Davy said a growing number of tenants were now looking to purchase their property due to ongoing rental increases in the industrial market.
“In this case the opportunity arose for the tenant to purchase the building they occupied, which made it an easy decision,” he said.
“As funding costs rise in the current market, we are seeing owner occupiers becoming more active, as they don’t require the return that investors do.
“This site offers great investment potential, however, as it is highly sought after by occupiers due to its location.
The property is 14 kilometres from the CBD and 11 kilometres from the Port of Melbourne, and well connected to key arterial roads.
Large occupiers in the area include Australia Post, Big Banner Australia, Pickering Transport, Agco, Delta Group, Beaurepaires and Kennards Hire.
Braithwaite said Melbourne’s industrial vacancy was some of the tightest across the country. According to CBRE, it is at just 1.1%, while Knight Frank data shows the available stock in Melbourne fell by a whopping 70% in 2022 to 231,640 sqm.
“Compounded by a lack of zoned industrial land available for immediate development, opportunities for owner occupiers are slim,” Braithwaite said.
“As rental growth continues to play out and leasing opportunities are reduced, some occupiers are looking to take back control and own their premises.
“Properties with less than two years remaining on leases are now hotly contested between owner occupiers and investors looking to capitalise on rental uplift.”
