- COVID-19-induced lifestyle purchases such as boats, jet skis, and caravans are fuelling demand for small scale warehouse spaces in Melbourne’s southeast
- Nichols Crowder director Matt Nichols says 80 per cent of all transactions in the group have been across the industrial sector, with demand outstripping supply
- This mismatch is also fueling price growth, according to Mr Nichols, who says growth is coming from small businesses looking for larger 250sqm spaces
- Owner-occupiers are beating investors to the punch as they are willing to pay higher prices
In Melbourne’s southeast, COVID-19 induced lifestyle purchases such as boats, jetskis and caravans are fueling demand for small scale warehouse spaces as owners look for somewhere to store their new goodies.
That is the experience of the Nichols Crowder team, whose director Matt Nichols said warehouse space was is in hot demand.
Mr Nichols said as a result of cancelled trip plans and other changes in a COVID-19 environment, additional industrial space was being for cars, boats and other big assets.
Mr Nichols said demand had been coming from all directions, with the team experiencing an uptake in transactions over the past 12 months. It has secured 644 commercial and industrial transactions, and resulting in a 17.5 per cent sales increase.
In the southeast area, the company reported $174 million in sales and leasing transactions, a 56 per cent increase on the previous year.
Mr Nichols said 80 per cent of all transactions in the group were across the industrial sector, with demand currently outstripping supply.
“We are well and truly under three per cent vacancy levels, it as a real problem,” he said. “We cannot satisfy the demand for tenants and purchases at the moment.”
This mismatch is also fueling price growth, according to Mr Nichols, who said most growth was coming from small businesses looking for larger 250sqm spaces due to the limited supply of stock.
Healthy yields, low-interest rates and stable incomes are also making commercial assets in the area attractive to investors, but owner-occupiers are beating them to the punch.
The real estate agency’s Onwards then Upwards FY21 Market Report said one aspect fuelling owner-occupier interest was the fact that if they bought a property, their interest cost was less than what their rental would be, so it had become cheaper to buy than rent.
“They are paying a higher price than the investors, so the investors have been really locked down in the market, that will create even more pent up demand,” Mr Nichols said.
“But you also have to keep in mind this lockdown, we cannot sell an investment property because I can’t show the investor through investment property.”