melbourne industrial research forecast report second half 2012

MELBOURNE INDUSTRIAL RESEARCH & FORECAST REPORT

www.colliers.com.au/research

Robust Market Prevails Due to Shortage of Prime SpaceThe Melbourne industrial market has remained steady over the six months to October 2012 due largely to the market’s tightly held structure. Over 600,000m2 of industrial space has been leased in buildings over 3,000m2 the past 12 months, with approximately 62% of this space being leased over the first half of the period and the remaining 38% over the past six months. The West represented 41% of the space leased over the past six months while the North and South East each represented 24% of the total space respectively.

There has been continued evidence of a shortage of prime space in the Melbourne industrial market which has led to an increase in take up in secondary grade stock. The space shortage has led to an overall increase in the amount of speculative development in the market, which comprises approximately 52% of the 63,690m2 of space currently in the development pipeline.

Net face rents remained stable across most markets over the past six months. Prime grade incentives too remained stable in most regions, except for the West and the South East. The South East saw a slight reduction in incentives, due to the reduction in available stock, while the West saw a slight increase in incentives.

Limited amounts of quality stock have been brought to the market over the past 12 months, leading to an overall decline in volume and value of total sales figures, however this has led to an increase in capital values. Between April 2012 and September 2012 six transactions were recorded totalling just under $134 million, as opposed to the eight transactions totalling $145 million recorded between October 2011 and March 2012. This reflects a decrease of 25% in total sales volume but only an 8% decrease in total sales figures.

Melbourne’s industrial land market has picked up over the past six months after a period of minimal activity. Both owner-occupiers and developers have come back to the market and approximately 90 hectares have transacted as a result.

SECOND HALF 2012 | INDUSTRIAL

KEY HIGHLIGHTS

• Increased activity from institutions and emerging offshore groups looking for large scale, income producing assets.

• The industrial land market has seen approximately 90 hectares of land transact over the last six months.

• Net face rents have remained stable across most regions in the market.

12-18 Distribution Drive, TruganinaPurchased by Dexus in joint venture with the Korean National Pension Service for $50 million.

MARKET INDICATORS FORECAST - 6 MONTHS

OVERALL PERFORMANCE

NEW SUPPLY /

TENANT DEMAND /

INCENTIVES /

FACE RENTS

CAPITAL VALUES

YIELDS

LAND VALUES

Figures as of Q3 2012*Equivalent Reversionary YieldSource: Colliers International Research

MELBOURNE INDUSTRIAL MARKET INDICATORS

Region GradeAverage Net Face Rents ($/sq m pa)

Average Incentives

Average Capital Value ($/sq m)

Average Market Yield*

Average Land Values

LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH

City FringePrime $130 $170 10% 15% $2,000 $3,000 7.75% 8.25%

$600 $750Secondary $80 $90 12% 18% $1,000 $2,000 9.00% 10.00%

Outer EastPrime $80 $90 8% 10% $1,100 $1,200 7.75% 8.25%

$220 $275Secondary $65 $70 10% 12% $900 $1,000 9.50% 10.00%

South EastPrime $80 $90 8% 10% $950 $1,100 7.75% 8.25%

$175 $250Secondary $50 $60 12% 17% $650 $750 9.50% 10.50%

NorthPrime $65 $85 8% 10% $1,000 $1,100 8.00% 8.50%

$165 $280Secondary $50 $65 10% 17% $800 $850 10.00% 11.00%

WestPrime $70 $75 10% 20% $875 $1,000 7.75% 8.25%

$110 $185Secondary $50 $55 10% 15% $650 $750 9.50% 10.50%

Economic Update SOLID NATIONAL ECONOMIC GROWTHThe June Quarter 2012 ABS Gross Domestic Product (GDP) data, showed in seasonally adjusted terms, GDP increased 0.6% during Q2 2012. Although slower than the strong result of 1.4% in Q1 2012, through-the-year GDP growth was a solid 3.7%. Deloitte Access Economics expect annual GDP growth to be 3.0% in 2012-13 and to rise to 3.4% in 2013-14 before easing to 3.3% in 2014-15.

UNEMPLOYMENT RATE STEADIES AS JOBS GROWTH DISAPPEARSThe unemployment rate remains at the healthy level of 5.2% (trend) where it has settled over the past four months. However, monthly full-time jobs growth has disappeared. August full-time jobs data shows there was a contraction (600) in the number of jobs. Over the 12 months to August 2012, full-time employment actually increased by 27,900 jobs and while this is the largest increase over a 12 month period since October 2011 it is well below trend. The ANZ Job Advertisement Series showed that number of job advertisements fell 2.3% in August after falling 0.8% in July to become the fifth consecutive monthly fall.

CONSUMER PRICES SETTLEThe latest inflation data from the Australian Bureau of Statistics (ABS) shows that annual headline inflation rose just 1.2% during the 12 months to June 2012, down compared with a rise of 1.6% through the year to March 2012. This saw the Consumer Price Index (CPI) grow by 0.5% during the quarter and ensures that the inflation rate remains well below the RBA’s target range of 2% to 3%.

INTEREST RATES STEADY Enough evidence showing that the national economy is growing at around trend without excessive inflationary pressures convinced the RBA Board to keep the official cash rate at 3.25% in November. The Bank pointed out that further effects of actions already taken to ease monetary policy can be expected over time.

THE AUSTRALIAN DOLLARAfter fluctuating around parity with the $US over the first half of 2012, the recent round of quantitative easing (QE3) announced by the US Federal Reserve has been accompanied by trade in the Australian Dollar at between $US1.02 and $US1.03.

Western Highway

Nepean Highway

Monash Freeway

Burwood Road

Princes Highway

20km

30km

10km

North

WestMelbourne CBD

& City Fringe

Princes

Freeway

Eastern Freeway

Eastern Freeway

Eastlink

SouthEast

OuterEast

Scoresby

Hallam

Lyndhurst

Thomastown

Braeside

Frankston

Port Melbourne

Heidelberg

Bundoora

Clifton Hill

Abbotsford

Richmond

Clayton

Mulgrave

Springvale

Cragieburn

Footscray

Bayswater

Croydon

Somerton

Coburg

Altona North

Derrimut

Campbell�eld

Broadmeadows

Sunshine

Dandenong

Wester

n Ring

Roa

d

Laverton North

MELBOURNE INDUSTRIAL MARKETS

COLLIERS INTERNATIONAL | P. 2

RESEARCH & FORECAST REPORT | SECOND HALF 2012 | INDUSTRIAL | MELBOURNE

Key Market Indicators

INDUSTRIAL CONSTRUCTION START•According to Cordells there is currently

303,698m2 of industrial space in some stage of development in Melbourne.

•The majority of space in the pipeline is already under construction (276,328m2) with completion dates anticipated between December 2012 and September 2014.

•There is only 36,521m2 of space with development approval and a further 10,000m2 of space in stages preceding development approval.

CONTAINER TRADE•The chart on the right indicates international

container movements at the Port of Melbourne, accounting for loaded containers only.

•Container exports have been relatively stable over the past 5 years, ranging between 500,000 and 600,000 TEUs (20ft equivalent units)

•In the 12 months to August 2012, container exports were 658,926 TEUs and container imports were 1,046,348 TEUs.

GROSS STATE PRODUCT•National Gross Domestic Product (GDP) was

2.1% in 2011. •GDP growth of 3.7% forecast for 2012 and is

forecast to go to 32.9% in 2013. •Victoria Gross State Product (GSP) was 2.4%

in 2011, similar to 2.4% in 2010. •GSP of 2.7% is forecast for 2012 and 2.2%

in 2013.

Source: Cordells / Colliers International Research

Source: Deloitte Access Economics / Colliers International Research

AUSTRALIAN AND VICTORIAN INDUSTRIAL PRODUCTION

AUSTRALIAN GDP AND VICTORIAN GSP

Source: Port Of Melbourne/ BITRE / Colliers International Research

CONTAINER TRADE - PORT OF MELBOURNE

Development Approval Contract Let Construction0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Import Export

Aug 2006 Aug 2008Aug 2007 Aug 2009 Aug 2010 Aug 2011 Aug 2012

1000

1200

800

600

400

200

0

2009

Victoria

20112010 2012 2013 20140.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Australia

Forecast



210 Lorimer Street, Port Melbourne1,242m2 recently leased to the Buchanan Group at a rent of $149/m2 pa.

City FringeNO NEW SUPPLY•There is no new major supply being planned

or under construction in Port Melbourne to be completed 2012 and 2013.

•Tenant demand in Port Melbourne has decreased with only two leases totalling 4,138m² transacting between April and September 2012.

•During the six months to March 2012, there were three major lease transactions totalling 16,375m² in Port Melbourne.

•Leasing activity included a lease by KONE Elevator Party Limited for units 12 and 13 on Bridge Road totalling 2,896m2.

•Prime grade average net face rents increased slightly now ranging from $130 to $170/m² while incentives remained stable in a range from 10% to 15%.

•Secondary grade rents and incentives have been stable over the past 12 months; rents ranging from $80 to $90/m² with average incentives to range from 12% to 18%.

CAPITAL VALUES STABLE WHILE YIELDS RELAX•Capital values for prime grade industrial

properties in Port Melbourne remained stable. Capital values currently range between $2,000/m² and $3,000/m².

•Average capital values for secondary grade industrial properties also remained stable over the six months to March 2012. It currently ranges between $1,000/m² and $2,000/m².

•Average market yields for prime grade properties relaxed over the six months to October 2012. It currently ranges between 7.75% and 8.25%.

•Average market yields for secondary grade properties remained stable to October 2012 and currently range from 9% and 10%.

LAND VALUES INCREASE •Land values have increased over the past six

months, currently ranging between $600/m² and $750/m², or an average of $675/m². This is anticipated to be caused by two factors:

- The shortage of land available within the City Fringe precinct; much of which is being purchased for mixed use and residential development rather than for industrial use.

- The availability of financing and lending which has remained tight over the past 18 months.



EastLIMITED NEW SUPPLY•Only one new building was completed

between March 2012 and October 2012 with 5,176m² comprising of 18 units.

•Four new buildings are currently under construction and will deliver approximately 12,144m² to the market upon completion during Q4 2012.

•Currently there is a shortage of existing prime grade stock available for lease.

•Tenant demand in the East increased over the six months period to October 2012 with approximately 29,700m² being leased.

•The largest lease signed during the last six months was that of 35 Centre Road, Scoresby which saw 11,322m² of space taken up by Heat Group.

•Shortage of vacant prime grade stock available for lease in the market has seen an increase in pre-commitment enquiry level.

•Over the last six months, similar to the South East region there has been an increase in secondary grade stock available for lease.

PRIME GRADE NET FACE RENTS INCREASED•Prime grade net face rents in the East

increased over the past six months to range from $80 to $90/m² and secondary grade net face rents remained stable and are currently ranging from $65 to $70/m².

•Incentives remained stable across all grades over the past six months, with prime grade incentives ranging from 8% to 10%.

•Secondary grade incentives currently range from 10% to 12%.

CAPITAL VALUES & YIELDS REMAINED STABLE•Average capital values for prime grade

industrial properties remained stable at an average of $1,150/m² in October 2012. It currently ranges between $1,100 - $1,200/m².

•Average capital values for secondary grade industrial properties remained stable at an average of $950/m² in October 2012.

•Average market yields for prime properties decreased over the six months to October 2012, while secondary properties remained stable. Prime yields currently range between 7.75% and 8.25%; secondary yields currently range between 9.75% and 10.50%.

LAND VALUES REMAINED STABLE•Very limited land sales in the region have

seen land values in March 2012 remain unchanged at an average of $248/m². It currently ranges between $220/m² and $275/m².

35 Centre Road, Scoresby11,322 m2 recently leased to Heat Group at a rent of $79/m2 pa.



South EastLEASING MARKET REMAINS TIGHT•A lack of new development activity and

ongoing strong tenant demand has led to an under supply of large prime grade industrial space available for lease in the South East.

•Seven new buildings were completed with approximately 46,000m² of space during the last six months. Approximately 83% of the space completed is already pre-committed.

•Approximately 26,000m² of space is under construction, due for completion in Q4 2012 and 2013. Approximately 41% of the space under construction is already pre-committed.

•Consolidation and business expansion have been the main drivers for strong leasing market in the region.

•Tenant demand in the South East remained strong with approximately 94,702m² leased between March 2012 and October 2012.

•The largest lease signed during the last six months was that of 80-96 South Park Drive, Dandenong South which saw 10,000m² of space leased by Shriro Australia.

•Over the last six months, there has been an increase in secondary grade stock available for lease.

•Pre-lease enquiry remains strong due to limited quality stock available for lease.

•Prime grade rents remained stable over the past six months and now range between $80 - $90 /m² pa. Prime grade incentives relaxed over the past six months and are now ranging from 8% to 12%.

•Secondary grade net face rents softened over the past six months and now range from $50 to $60/m² pa.

•Incentives for secondary properties also increased and are now ranging between 12% and 17%.

LACK OF PRIME GRADE STOCK FOR SALE •Currently there is a shortage of prime grade

stock available for sale. Enquiry levels remain strong from buyers looking to purchase good quality stock. Prime grade yields and capital values remained strong. Average yields currently range from 7.75% to 8.25% and capital values remained stable at $950 to $1,100/m².

•Average secondary grade capital values softened over the past six months and range between $650 to $750/m².

•Average secondary yields have remained stable over the six months to October 2012. Secondary yields range between 9.50% and 10.50%.

LAND SALES REMAINED SUBDUED•The land market has continued to see low

levels of vacant land sale transactions over the last six months.

•Land values have remained stable over the last six months to October 2012, at an average of $213/m². Land values currently ranges between $175/m² and $250/m².

2-20 McDonalds Lane, Mulgrave8,800m² recently leased to Couriers Please at $82/m2 pa.



NorthSTRONG TENANT DEMAND•Tenant demand remained strong with

12 tenants taking up 55,000m² between April 2012 and September 2012.

•Vacancy rates for buildings over 3,000m² remain low with only 52,700m² of space currently available in the northern industrial market.

•Construction activity is limited however the increasing tenant demand for stock over 3,000m², which dominates the market along with shortage of available stock should create more prelease opportunities such as the recently concluded prelease deals at Melbourne Airport including:

•Borders Express committed to a new premises at Melbourne Airport with construction recently commencing and completion due in March 2013; and

•Fellowes committing to a 7,383m² building recently completed at Melbourne Airport.

RENTS AND INCENTIVES REMAIN STABLE •Prime grade average net face rents

increased slightly and now range from $65 to $85/m² pa.

•Average incentives for Prime grade properties remained stable 8% to 10% in October 2012.

•Secondary rents remained in a range from $50 to $65/m² over the last six months, with average incentives ranging from 10% to 17%.

CAPITAL VALUES AND YIELDS STEADY•Over the past six months only one

transaction over the $5 million category was noted. 103-121 Western Avenue, Tullamarine was sold for $7.31 million.

•Average capital values for prime and secondary industrial properties remained stable in October 2012 at $1,050/m² for prime grade properties and $825/m² for secondary grade properties.

•Prime grade yields decreased over the half and now range between 8.00% and 8.50%; secondary grade yields remained stable ranging between 10.00% and 11.00%.

LAND SALES ACTIVTY IMPROVED•Over the last six months there has been

strong demand from local developers and owner occupiers for land.

•Land values increased over the past six months increasing from $165/m² - $265/m² in March 2012 to $165/m² - $280/m² in October 2012.

•Two major land sales over the last six months included:

•410 Cooper Street, Epping – A 32 ha site sold for $5.5 million achieving a land value of $17.18/m²; and

•135 Donnybrook Road, Mickleham – A 144 ha site purchased by Australian Government for $40 million at $27.77/m². The land will be home to Australia’s new $400 million state of the art quarantine centre post entry quarantine (PEQ) facility.

•The smaller retail industrial blocks continue to trade well with only two remaining lots available within Meridian Business Park.

410 Coopers Street, EppingSold for $5.5 million



WestSTRONG TENANT DEMAND CONTINUES•The West continues to remain Melbourne’s

best performing region.•Major speculative development activity in

the West has slowed the pre-commitment activity during 2012.

•One recent trend is larger tenants with requirements above 10,000m² for prime grade stock are absorbing speculative developments instead of pre-committing for new space.

•Leasing activity remained strong between March 2012 and October 2012 where 14 major leases were signed, totalling 133,325m².

•Tenant enquiry level remains strong in the region with approximately 250,000m² in the market for mid to long term.

•Four speculative buildings were completed between March 2012 and October 2012, adding 25,179m² to the region.

•Three new buildings are currently under construction which will add 25,106m² by December 2012. All four buildings currently under construction are Speculative developments.

•During 2013, there is a potential oversupply of existing properties in excess of 10,000m².

RENTS & INCENTIVES•Prime grade average net face rents remained

stable and continue to range from $70 to $75/m² with incentives increasing marginally and currently range from 10% to 20%.

•Secondary grade average net face rents and incentives remained stable and currently range from $50 to $55/m² with average incentives ranging from 10% to 15%.

PRIME GRADE CAPITAL VALUES INCREASED•There were three major investment grade

transactions over $5 million during the past six months totalling $101.35 million.

•Three significant vacant possession sales were concluded in 2012, totalling 33,219m² in comparison with no major sales reported during 2011 due to lack of stock and financing issues.

•Private Investors in the $5 million plus market continue to dominate the investment sales market.

•Owner occupiers are starting to enter the market.

•Major transactions included the sale of 12-18 Distribution Drive, Truganina ($50million) and 364-426 Old Geelong Road, Hoppers Crossing ($39.35 million).

•Prime grade capital values increased over the past six months with values ranging from $875 to $1,000/m² while yields remained stable ranging from 8.00% to 8.50%.

•Secondary grade space has seen capital values and yields remain stable at 9.50% to 10.50% while capital values currently range from $650 to $750/m².

LAND VALUES SOFTENED MARGINALLY•Land sales over the last two years have

been subdued. During 2012, there has been an improvement in enquiry levels in the land market. This increase in activity have been driven by a number of key factors, namely; improving confidence from both developers and occupiers, realistic pricing from vendors and a lack of supply of built product in the market.

•Land values have softened slightly from March 2012 to October 2012. It currently ranges between $110/m² and $185/m², as opposed to a range of $120/m² to $185/m² in March 2012.

364-426 Old Geelong Road, Hoppers CrossingPurchased by Charter Hall for $39.35 million.



New Supply Pipeline DEVELOPMENT UPDATE

Address Suburb Total Area (m²) Status Estimated Completion Date Comments

Outer EastEastern Business Park, 88 Merrindale Drive Croydon South 5,176 Complete Q2 2012 Speculative Development, 18 units

Stage 2 (9 out of an 18-unit development)

38 Corporate Boulevard Bayswater 2,217 Under Construction Q4 2012 Developer: Encapsa

88 Merrindale Drive Croydon 4,043 Under Construction Q4 2012 Speculative Development, 18 units

184 Chesterville Road Moorabbin 3,874 Under Construction Q4 2012 Speculative Development, 15 units

1154 Burwood Highway Ferntree Gully 2,010 Under Construction Q4 2012 Speculative Development, 7 Office Showrooms

19 Cornhill Street - Stage 2 Ferntree Gully 5,321 DA Approved Developed by DMV Developments

South East

6-8 Railway Avenue Oakleigh 2,000 Under Construction Q4 2012 Speculative Development, 12 units

36 Bessemer Drive Dandenong South 4,000 Complete Q4 2012

Lot 35 Bessemer Drive Dandenong South 2,500 DA Approved Q1 2012

Lot 31 Bessemer Drive Dandenong 2,392 Under Construction

Lot 30 Crompton Way Dandenong 4,688 DA Approved Q1 2013

Lot 4 Produce Drive Dandenong South 4,000 Complete Q4 2012 Speculative Development

Colemans Road Dandenong South 12,000 Complete Q4 2012 Pre-committed by Whitewires

Lot 39 Pacific Drive Keysborough 1,903 Under Construction Q4 2012

Lot 40 Pacific Drive Keysborough 2,077 Under Construction

M1, Monash Drive Dandenong South 7,500 Complete Q4 2012 Pre-committed by Pentair

469-491 Frankston Dandenong Road Dandenong South 7,500 Complete Q4 2012 Pre-committed by Heritage Seeds

Factory 1, 13 Advantage Drive Dandenong 4,000 Under Construction Q4 2012 Speculative Development

The Key, Lot 15 Atlantic Drive Keysborough 7,000 Complete Q4 2012 Pre-committed by Romak

Logis South, Bessemer Drive Dandenong South 4,000 Complete Q4 2012 Pre-committed by Ironman

Lot 9 Arkwright Drive Dandenong South 5,175 Under Construction

158-194 Abbotts Road Dandenong South 10,372 DA Approved 2013 Pre-committed by Parker, Dexion

Lot 1 - 6 Lecton Drive Dandenong South 22,100 DA Approved

Lot 10 Lecton Drive Dandenong 22,590 DA Approved Speculative Development

10 Austral Place Hallam 1,529 DA Approved

3-4 Anzed Court Mulgrave 1,985 Under Construction 2013 Speculative Development, 5 units

236-246 Governor Road Braeside 6,908 Under Construction 2013 Speculative Development

Lot H - Arkwright Drive Dandenong South 7,956 DA Approved Q2 2012 Pre-committed by Marine Power International

2 Bessemer Drive Dandenong South 2,392 DA Approved Q3 2012 Speculative Development

10 Miles Street Mulgrave 3,184 DA Approved Q4 2012 Speculative Development

North

Northpoint Enterprise Park Epping Planned 4 lots in Stage 1 available, Stage 2 now fully serviced and have been released

Mickleham Business Park Mickleham Planned Stage 1 available, land options from 3,000 m² to over 10 ha, pending pre-commitment

Amaroo Business Park Craigieburn Planned Lots range from 9,700 m² to 50,000 m², pending pre-commitment

Merrifield Mikelham Planned Total land of 420 Ha, awaiting pre-commitment

West

1/8 Weddel Court Laverton North 3,100 Complete Q2 2012 Speculative Development



29-31 Jessica Way Truganina 3,300 Under Construction Q4 2012 Speculative Development

128 Swann Drive Derrimut 7,766 Under Construction Q2 2012 Speculative Development

Lot 2 Distribution Drive Laverton North 15,529 Complete Q2 2012 Speculative Development

Drake Boulevard Speculative Development Altona 14,040 Under Construction Q4 2012 Speculative Development

Source: Colliers International Research



LEASING ACTIVITY

Address Suburb Start Date Size (m²) Net Face Rents ($/m²) Tenant

City FringeUnits 12 & 13 Bridge Road Port Melbourne Jun-12 2,896 $160 KONE Elevators Pty. Ltd.

210 Lorimer Street Port Melbourne Sep-12 1,242 $149 Buchanan Group

Outer East35 Centre Road Scoresby Sep-12 11,322 $79 Heat Group

32-40 Garden Street Kilsyth May-12 10,647 $128 Radio Frequency Systems

6 Expo Court Mount Waverley May-12 1,800 $83 Private

6 Dalmore Drive Scoresby Aug-12 5,964 $82 MacDonald Johnston

Inner East14-17 Dansu Court Hallam Feb-12 15,727 $80 GM

5B, 28-30 Green Street Doveton Apr-12 3,279 $52 Adidem Group

6 Garden Boulevard Dingley Apr-12 4,353 $70 Dyanmic Direct

926 Mountain Highway Boronia Apr-12 3,471 $87 Phoenix Tapware

1/14 Monterey Court Dandenong May-12 5,670 $70 Tasman Logistics

37-41 Fireways Blvd Keysborough Aug-12 2,500 $82 Sika Australia

2-20 McDonalds Lane Mulgrave Sep-12 8,800 $82 Couriers Please

4 Miles Street Mulgrave Jun-12 1,040 $149 Millenium Signs

80-96 South Park Drive Dandenong South Apr-12 10,000 $70 Shriro Australia

37 Conquest Way Hallam Jun-12 15,333 NA Undisclosed

106 Fairbank Road Clayton South Aug-12 9,601 $36 Furniture & Bedding

2 National Drive Dandenong South Sep-12 5,850 $71 Utility Asset Management

134-140 Atlantic Drive Keysborough Aug-12 3,855 $86 RC Waves

215 Browns Road Noble Park Aug-12 3,600 Tomax Logistics

11 Network Drive Carrum Downs Jun-12 1,623 $100 Conveyer Pulleys Australia

North32 Mc Gregors Drive Keilor Park Aug-12 1,530 $85 Osmoflo

159 Bamfield Road Heidelberg West Aug-12 2,024 $80 Partos Plus

117 Bamfield Road Heidelberg West Jun-12 3,735 $107 Chocolatier Australia

12 Brand Drive Thomastown Jun-12 2,130 $85 LED Technologies

30 Brand Drive Thomastown May-12 3,176 $57 Cabrini Health

15 Berwick Road Campbellfield May-12 4,048 $47 Marino Brothers Transport

Metrolink Business Park Campbellfield Aug-12 1,500 NA Federation Logistics

42 McIntosh Street Airport West Apr-12 1,169 $64 AM Metal Solutions

225 & 227 Bary Road Campbellfield Apr-12 5,913 $50 Precision Mail

Melbourne Airport Tullamarine Sep-12 18,975 $65 Borders Express (Pre-commitment)

Melbourne Airport Tullamarine Sep-12 7,383 $65 Fellowes (pre-commitment)

153 Barry Road Campbellfield Apr-12 3,810 $92 Jemena

WestLeo Court Derrimut Apr-12 9,960 Undisclosed Australia Post

445-469 Grieve Parade Altona North Feb-12 18,816 $65 Toll In 2 Store

48-52 Slough Road Altona Apr-12 3,189 $50 Knauf Plasterboard

21-23 Agosta Drive Laverton North Derrimut Apr-12 4,071 $65 Clemenger Freight

Lot 2 Distribution Drive Laverton North Sep-12 15,529 Undisclosed ACFS

50 Cyanamid Street Laverton North May-12 5,500 $65 T2

148 Paramount Boulevard Derrimut Jul-12 3,238 $85 Probitoec

2-8 Oxford Road Laverton North Sep-12 13,750 $42 Premium Oz

1/8 Weddell Court Laverton North Sep-12 3,300 Undisclosed Electrix

128 Swann Drive Derrimut Oct-12 7,766 $86 Cope Sensitive Freight

Olympia Street Tottenham Oct-12 15,250 $53 ACFS

24 Little Boundary Road Laverton North Oct-12 4,080 $60 Ennesty Energy

1-11 Andretti Court Truganina Sep-12 26,376 Undisclosed Catch of the Day

1 Cawley Road Brooklyn Sep-12 2,500 $62 Australian Temporary Fencing

Recent Market Transaction Activity




INVESTMENT SALES ACTIVITY

Address Suburb Sale Date Sale Price Area (m²)

Capital Value ($/m²)

Passing Yield* Vendor Purchaser

City Fringe

134-150 Buckhurst Street South Melbourne Aug-12 $11,000,000 5,400 $2,037 Private Investor

West

364-426 Old Geelong Road Hoppers Crossing May-12 $39,350,000 52,612 $748 8.07% Cromwell Charter Hall

12-18 Distribution Drive Truganina Aug-12 $50,000,000 42,954 $1,164 9.00% AMP Capital Investors

Dexus & Korean National Pension Service

99-103 William Angliss Drive Laverton North Jul-12 $12,000,000 6,554 $1,831 15.50% APGF Black Star Investments

North

103-121 Western Avenue Tullamarine May-12 $7,312,000 6,117 $1,195 10.43% PEET Limited Private Investor

South East

72-96 Station Street Nunawading Aug-12 $18,450,000 22,541 $819 8.10% Aspen Private Investor

C3, 621 Whitehorse Road Mitcham Jun-12 $6,700,000 3,688 $1,817 8.72% Private Private Investor

Recent Market Transaction Activity


* Exchange Date ** Equivalent Reversionary Yield

INFRASTRUCTURE UPDATE

Infrastructure Project Location Status Estimated Completion Date Comments

Road

Peninsula Link Frankston to Mornington Peninsula Under Construction Q1 2013

Work on the Peninsula’s largest infrastructure project commenced in early 2010 and is expected to be completed in early 2013. 27 km of freeway standard road. The $759 million Peninsula Link project will bring many benefits to people living in and visiting Frankston and the Mornington Peninsula.

M80 Ring Road Upgrade Edgars Road to Plenty Road Under Construction Q2 2014 (Phase 1)

$2.25 billion upgrade, jointly funded by the state and federal gov-ernments, to include widening and improvements. The upgrade is being completed in sections, with the most congested sections and those with the worst safety record being worked on first.

Infrastructure Update

Source: Colliers International Research, VicRoads, State Government of Victoria



OutlookOn the back of expectations of consistent tenant demand for prime grade space and limited availability of such stock, the Melbourne prime grade industrial market is predicted to remain tight over the short to medium term. In the wake of this Colliers International anticipates that there will be a continued absorption of secondary stock as tenants are pressed to find elite new space. Rents are expected to remain stable in both prime grade and secondary grade markets over the next 12 months.

The amount of speculative developments has continued to diminish over the past six months and this trend is projected to continue as many developers need to wait for pre-commitments before obtaining finance to commence construction on new developments. This will result in a continuation of limited supply over the next 12 months within this tightly held market.

Lack of quality stock available for sale in the Melbourne industrial investment sales market, coupled with an increased demand from investors, is expected to continue in the short to medium term. This is anticipated to create further yield compression and higher capital values for this asset class over 2013. Due to the compression in yields Colliers International expects the secondary grade market will come to the forefront over 2013 as investors will look to purchase secondary grade stock containing core property fundamentals with a more reasonable yield.

Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections.

Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. COPYRIGHT - Colliers International 2012.

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melbourne industrial research forecast report second half 2012

Documents

total space

000m2 of industrial

space shortage

south east

690m2 of space

secondary grade stock

monthly fulltime jobs

total sales volume