Colliers secures sale of in-demand industrial asset in Dandenong South31 January 2023
A private owner occupier has purchased a 7,103sqm, A-grade industrial office and warehouse facility in one of Australia’s most tightly held core infill industrial locations, Dandenong South, in excess of $18 million.
Colliers’ exclusive selling agents, Gordon Code and James Stott, managed the sale of 32-44 Rodeo Drive, which was the first major vacant possession infill opportunity to be offered on the market for a number of years in this location. The level of demand was noticed throughout the campaign, with 200 enquiries and over 15 bids.
Dandenong South is one of the country’s most established industrial precincts in close proximity to Melbourne’s south-east corridor and major roads, just 30 kilometres from the city’s CBD.
Colliers’ Director James Stott said Melbourne’s South East is currently one of the tightest market’s in Australia total vacancy rate in the South East submarket measures 0.16%.
“Melbourne’s South East market stands out from other industrial markets around Melbourne due to the lack of future supply with available land,” said Mr Stott.
“It’s been one of the most active industrial markets for leasing activity over the last three years, with record levels of demand, which have led vacancy rates to decline sharply. It is creating systemic issues for a large section of the market, who tend to compete fiercely when these extremely rare opportunities come to market,” Mr Stott added.
Colliers’ Director Gordon Code said, “The most significant change we have seen into Q4 2022-2023 is the changing of the guard in terms of buyer profiles looking at these sorts of opportunities with owner occupiers now outpricing investors, which is tied to the stage of the investment cycle.
“Throughout 2022, we observed the cost of capital and interest rates impacting cap rates and pricing for investors, with owner occupiers dominating recent sales campaigns, given the backlog of demand in the marketplace for assets of this calibre. This was reflected in the Rodeo Drive campaign with 75% of bids coming from occupier groups,” Mr Code concluded.