Melbourne’s Industrial North is seeing huge growth at present with a significant new development in the pipeline. According to John Georgiou, Commercial Industrial Specialist for Epping and Thomastown in North Melbourne, “the main reason for this is the population growth and the number of companies moving out of built up areas closer to the CBD. Many of the city fringe industrial suburbs are slowly being redeveloped to residential, therefore companies are looking to be closer to the main arterials with more modern facilities.”
Owner occupiers are being attracted to the North Melbourne market and an increase in demand for new facilities is arising. Mr Georgiou says “I believe that with the low interest rate environment and many years of increased growth in the economy, this has enabled people to afford a quality product and demand a new facility rather than older. The new estates are now located on main arterial routes making them highly sought after.”
The ‘New Epping’ development proposes to transform a once old quarry into a huge $1.2 billion master-planned mixed-use community.
“This is an exciting, massive mixed-use development. When the time comes we would surely be looking at trying to become appointed with other commercial firms. This development will predominately be retail and commercial with a smaller amount of industrial.”
Developments such as the ‘New Epping’ are certain to bring about change in the market but Mr Georgiou believes “As long as the development is slowly released onto the market it will not drastically effect the supply we have”.
Mr Georgiou predominantly is selling to owner occupiers off the plan buildings that are of a very high quality, with 20% office component or more. Owner occupiers are taking advantage of the ‘off the plan’ stamp duty saving that will expire this month. The State Government’s proposed plan for the end of June will remove any form of off the plan stamp duty savings. This means a high rate of stamp duty in the commercial sector of 5.5% will take effect after June. Mr Georgiou says, “The off the plan stamp duty saving will cause us substantial difficulty in the near future as some of these savings can be quite significant”.
“Many of our investment sales are new and vacant properties, as investors are after the depreciation that a new building offers, investors are achieving a 6.5% to 7% yield. We also have a few estates that are now completed with many outside builders commencing construction and these are selling below market rates.”