Investors Sink $77m into Melbourne Industrial Assets

Investors are banking on Victoria’s industrial fundamentals, closing deals worth tens of millions of dollars for assets with rental upside and redevelopment potential. Recent transactions include a private investor who acquired a land-rich industrial asset at Reservoir for $7.5 million, while a masterplanned business precinct at Clyde North sold out all 25 lots for around $70 million within months. The Reservoir transaction involved a 5141sq m manufacturing facility on an 8975sq m site at 297-301 Edwardes Street ( pictured top ), reflecting a passing yield of 5.06 per cent and an equivalent market yield of 7.54 per cent. CBRE’s Josh Deluca, Daniel Eramo, Jake George and Charlie Betts managed the sale, which attracted significant interest during a competitive expressions of interest campaign. “This transaction underscores the market’s appetite for value-add investment opportunities, with investors actively seeking assets with strong fundamentals and potential for growth to enhance their portfolios,” Deluca said. The property has a long-standing tenant with an upcoming lease expiry and a further five-year term available. Deluca said the buyer recognised the long-term potential through near-term rental reversion and future development strategies. Meanwhile, the Wilmac Clyde North project in the City of Casey sold out within months of launching in late 2024, with the final lot within the 8.8ha development sold by the end of November. Construction works are nearing completion with land lots expected to settle early in 2026. LAWD director, development and projects Henry Burbury said the result reflected sustained demand for quality, well-located commercial land and follow LAWD’s rapid two-month sell-out of Oreana’s WT Business Park. ▲ All 25 lots at Wilmac Clyde North sold within months of the project’s late-2024 launch. “Both WT Business Park and Wilmac Clyde North sold extremely quickly, highlighting the underlying demand for strategically positioned landholdings,” Burbury said. “The strong appetite from businesses to secure sites in these precincts also speaks to the calibre of the developers, who are committed to creating vibrant, functional and future-focused business hubs.” Burbury said there was significant optimism in the commercial and industrial property sector, particularly as residential construction softened in Victoria and many builders pivoted towards commercial opportunities. The Wilmac Clyde North precinct has arterial access and a 3000sq m central park. The development is expected to generate around 400 jobs, including 120 during construction, and contribute more than $100 million annually to the local economy once fully operational. Wilmac Properties director Chris Wilkins said the sales outcome was a significant win for Clyde North and the City of Casey, with planning under way for the next development phase. “We are committed to delivering well-designed, dynamic business communities, and preparations are already under way for a new parcel of land on Tuckers Road, which would be released to market in the first half of 2026,” Wilkins said. Broader market trends show subdued but resilient activity across Melbourne’s industrial sector. Gross take-up for the third quarter totalled around 165,000sq m, a decline from the previous quarter, with tenant enquiry remaining subdued according to CBRE Research. Melbourne’s west precinct accounted for more than 50 per cent of total take-up, followed by the south-east at 27 per cent. ▲ Speculative warehouse construction has outpaced tenant demand across Australia’s east coast industrial markets. New floorspace totalled around 110,000sq m across seven major projects, with most completions in the west. A significant portion of Melbourne’s supply pipeline is not yet under construction, creating uncertainty around project timing. Vacancy rose from 3.1 per cent to 4.1 per cent as rents declined 1 per cent quarterly. Businesses are favouring lease renewals over new commitments, with Melbourne showing the steepest decline in new project rollout , down 40 per cent. The majority of the city’s development pipeline remains uncommitted. Land values recorded a marginal decline as economic rents exceed market rents by 42 per cent in Melbourne’s west and 22 per cent in the north. Centuria head of listed funds Grant Nichols said the economic rent required for new developments remains above market rent nationally. “At the moment, it is difficult to make a feasibility stack for a lot of industrial development, which is why we think there is going to be continued constraint on supply, which will keep vacancy rates down,” Nichols said. East coast completions are forecast to fall 20 per cent in 2025 as developers respond to softening conditions. Investment sales totalled around $255 million in the third quarter across 16 transactions valued at or above $5 million, with local private capital leading volumes. Investors are pivoting towards industrial subsectors including cold storage, data centres and advanced manufacturing as feasibility challenges constrain traditional warehouse development, according to Savills head of research Katy Dean.

Investors Sink $77m into Melbourne Industrial Assets

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