Leasing and sales activity in Melbourne's industrial sector is expected to remain elevated this year despite slower economic conditions.
A flow through of firms renewing 10-year leases inked during the healthy pre-commitment market from 2004 onwards is likely to sustain activity for several years, Savills' Australia divisional director David Norman said.
Savills research shows pre-commitment deals up for renegotiation rose 45 per cent last year.
On the sales side, industrial assets were becoming highly sought-after as investors move to take advantage of favourable borrowing conditions and diversify their portfolios, CBRE's head of industrial and logistical services Matt Haddon said.
Mr Haddon said traditional logistics assets remained appealing to local investors due to their long lease profiles, fixed income growth and corporate tenant profiles.
"Reports of strong returns in the Australian industrial market have attracted a growing number of offshore investors, which has boosted activity," he said.
Global capital markets were more familiar with sub-sectors like refrigerated logistics and data centres, he said.
Oxford Cold Storage in Laverton North is one such asset looking to cash in on growing investor demand. Boasting the largest refrigerated logistics footprint in Asia Pacific, the family-owned business is for sale and leaseback.
Its 120,000 square metres covers 14 temperature-controlled warehouses, two conventional warehouses and various support buildings, and has a price tag around $250 million.
Savills' research shows a 30 per cent rise in leases signed in 2014 (658,514 square metres).
The boost was being driven by expiring leases, tenants rationalising facilities, consolidation and company growth, Mr Norman said.
Businesses renewing leases were entering a "very competitive market and getting good deals on the way through," he said. "The market's still pretty patchy, but there's a focus from business to get the most out of their accommodation."
Supply chain firm CEVA Logistics is seeking 70,000 square metres, Woolworths needs 40,000 square metres and Kathmandu want 25,000 square metres, with more expected to come to the market.
Urbis director Shane Robb said 2014 had seen an increase of almost 80 per cent over the previous year of sales valued above $10 million.
Investors spent more than $1 billion on 33 transactions, the largest being Invesco's purchase of the Kmart distribution centre for $94.1 million in December.
Mr Robb said local trusts (both REIT's and unlisted) accounted for 57 per cent (by value) of transactions, just over $610 million, last year.
A significant majority of sales were individual property transactions. Portfolios made up around only 13 per cent of the total value, with about 70 per cent ($770 million) off market transactions.
Private investors purchased seven buildings (totalling $114 million), super funds backed two major transactions of $170 million, and international investors accounted for another two of $120 million.
The western industrial submarket accounted for the majority of sales, Mr Robb said.
In the sub-10,000 sqm market there has been a lot more activity from owner-occupiers because of low interest rates, Mr Norman said.
Mr Robb said private investors purchased 7 buildings totalling $114 million last year. The largest was Up Property which snapped up 215 Browns Road in Noble Park for $21.8 Million.
