Infrastructure improvements leading the way for stronger industrial real estate in south-east suburbs

As Australia’s population continues to grow, it becomes necessary for the government to begin infrastructure growth and improvements to support the community’s needs. Rapid population growth and high population density across the east coast has underpinned the increase in land value throughout Australia’s largest capital cities; as land availability for industrial development becomes limited, and its uses restricted to other purposes if in proximity to the CBD.

Recently industrial property occupiers flocked to suburban Melbourne. Luckily for Melbourne’s industrial property market, a range of transport infrastructure improvements are under construction. Several of these infrastructure projects are currently in the works and are expected to have a significant impact on the way the Melbourne industrial market operates, re-shaping demand for industrial land.

The completion of these projects are also expected to support industrial development beyond traditional capital cities industry precincts, and into regional and suburban locations, that are in proximity to new road and rail transport infrastructure.

There is currently no doubt that the existing transport infrastructure investments are set to alter the outlook of the industrial market, not only for industrial operations but also for investors and developers currently revisiting their investment strategies. They will need to recognise the ever-changing market dynamics that are created by infrastructure improvements and investments.

For the industrial property industry, the latest instalment from the Victorian government of a $1 billion pipeline of road and rail projects for Melbourne’s south-east will have the largest impact. Motorists and public transport users in east and south-east Melbourne will benefit from an investment in congestion-busting infrastructure, that is set to ease traffic concerns for the rapidly growing region.

The most significant infrastructure improvements through this area, include the Monash freeway upgrade, where an extra 30kms of traffic lanes are being added to improve safety and congestion, the Thompsons Road duplication from Dandenong-Frankston Road to Berwick- Cranbourne Road and the Mordialloc bypass.

The new Mordialloc bypass will help to alleviate delays and improve safety in one of outer Melbourne’s fastest-growing areas. It will connect the Mornington Peninsula freeway to the Dingley bypass. The new arterial road that is set to be finished by late 2021, will improve access to the Dandenong South Employment and Innovation Cluster and industrial areas in Braeside and Moorabbin. Industrial property occupiers will therefore want to locate themselves as close as possible to the Mordialloc bypass. Occupiers are moving from Bayside locations to Braeside industrial market, due to flight to quality and to move closer to home.

It’s been one massive year since we started work to build the new Mordialloc Freeway, which will link the Mornington Peninsula Freeway and Dingley Bypass.

More than 600,000 hours of work has been completed since October 2019 and it shows ?

Read more: https://t.co/CmpwBOf0iV pic.twitter.com/NqzyTftPAQ

— Major Road Projects Victoria (@roadprojectsvic) November 5, 2020

The Braeside/Mordialloc precinct have been impacted by the Keysborough property market over the last 5 years, but now with the road network improving in this area, they are making a comeback. This comeback will be bolstered especially by the new Frasers land subdivision and speculative construction throughout the south-east suburbs. This will naturally build on an already strong industrial property market through the south suburbs.

The industrial market throughout Melbourne’s south-east will become more competitive as a result of the improvement in transport infrastructure, and occupiers flocking close to improved infrastructure.

However, the supply of industrial land throughout this south-east strip is diminishing fast, as occupiers are realising the pure value of the area. Which has led to increased prices of land and rentals and shrinking vacancy rates. The increasing strength in the market is also set to lead to a further increase in industrial property pricing, especially after an extraordinary year for Melbourne’s industrial property market in 2020.

Continued infrastructure projects and improvements from the Victorian government are only leading the way for a stronger industrial property market throughout Melbourne, during 2021 and beyond.