Following paint maker Dulux’s pioneering move to their site in 2015, the developers of the sprawling Merrifield Business Park in Melbourne’s outer north have signed their third key occupant for the 330 hectare complex.
The family-owned Steritech, which treats fresh produce bound for export markets, has acquired two hectares for an undisclosed price and plans to build a 3648 square metre screening facility to complement its existing Brisbane site.
Steritech CEO Murray Lynch said the site was located strategically, given its proximity to Melbourne Airport and the Hume Freeway which provides overnight access to Sydney Airport.
It is also near Melbourne’s new fruit and vegetable market at Epping.
“With Melbourne being Australia’s largest hu for horticultural trade, the new facility will play a key role in driving the future growth and sustainability of the entire horticultural sector,” he said.
In February WA-based small goods supplier D’Orsogna signed up for 10,858 sq m at the site, as part of a $41 million expansion.
Dulux meanwhile has begun making water-based paints at its completed $175 million facility.
Claimed to be Melbourne’s biggest planned business precinct, the Merrifield Business Park is being developed by MAB Corporation and Gibson Property Corporation.
In its favour, Colliers reports that the northern Melbourne market shows few signs of abating after recent record high transactions.
In its June half industrial update, the agent says yields for both prime and secondary grade property abated an average 25 percentage points, to 6.25-7.25 per cent.
The firm cites Frasers Property’s sale of 23 Scanlon Drive Epping, which recently sold for $15.7 million on a 6.2 per cent yield.
“The transaction settled 30 days after purchase, demonstrating that regardless of perceived weakness investments are in high demand in the current market.”
Based on two highly comparable transactions, the firm estimates that selling prices in the north soared by 47 per cent in the 18 months to June 2018.
In late 2016, a 2100 sq m lot at Epping’s Connect North Business Park sold for $272 sq m. Also in Epping, a 2140 ha lot at Alliance Business Park (another MAB project) recently fetched $480 sq m.
However northern suburb industrial rents have remained “relatively flat” at $80 sq m for prime property and $60 sq m for secondary locations, the results of a lack of transactions to spur rent reviews.
More broadly, Colliers says national industrial valuations are likely to remain supported as Australia enters its 28th year of uninterrupted economic growth.
The firm says the average net face rent on Sydney industrial property edged up 2.8 per cent over the year, to $144 sq m (delivering a skinny yield of 5.26 per cent).
In Melbourne, average rents rose 0.9 per cent to $108 sq m, yielding 6.06 per cent.
WORDS: Tim Boreham
Originally published in The Age on October 20 2018