Melbourne inner west industrial property purchased by owner- occupier

An industrial property in Melbourneโ€™s inner west has been snapped up by an owner-occupier amidst a trend of tenants increasingly looking at purchasing their own premises rather than continue renting.

The property at 41 Strzelecki Avenue in Sunshine was purchased by an occupier for $11.5 million from a private investor in a deal negotiated by Joel Davy and Scott Braithwaite of Knight Frank.

The 12,225sqm site is occupied by two office/warehouse 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 5,778sq m of net lettable area, with both buildings currently tenanted returning $506,000 per annum. The sale reflected an initial yield of 4.4%

The property is in a strategic location in Melbourneโ€™s inner west, 14 kilometres from the CBD and 11 kilometres from the Port of Melbourne, and well connected to key arterial roads providing excellent access to metropolitan Melbourne.

Mr Davy said a growing number of tenants were now looking to purchase their property due to ongoing rental increases in the industrial market.

โ€œIn this case the opportunity arose for the tenant to purchase the building they occupied, which made it an easy decision,โ€ he said.

โ€œAs funding costs rise in the current market, we are seeing owner-occupiers becoming more active, as they donโ€™t require the return that investors do.

โ€œThis site offers great investment potential, however, as it is highly sought after by occupiers due to its location.

โ€œThe strength of the area is evidenced by the abundance of large occupiers including Australia Post, Big Banner Australia, Pickering Transport, Agco, Delta Group, Beaurepaires and Kennards Hire.

โ€œIt is also a flexible site with future upside and the proven ability to split tenancies.โ€

Mr Braithwaite said Melbourneโ€™s industrial vacancy was some of the tightest across the country.

โ€œCompounded by a lack of zoned industrial land available for immediate development, opportunities for owner occupiers are slim,โ€ he said.

โ€œAs rental growth continues to play out and leasing opportunities are reduced, some occupiers are looking to take back control and own their premises.

โ€œWith limited acquisition opportunities, occupiers are actively looking at properties that have short- medium term leases in place when typically they would be buying closer to vacant possession.

โ€œProperties with less than two years remaining on leases are now hotly contested between owner occupiers and investors looking to capitalise on rental uplift.โ€

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