Market Updates

July 21, 2016

Industrial business parks attracting an increasing diversity of businesses

Nichols Crowder has been the leading commercial and industrial real estate firm in the Bayside, Carrum Downs and Mornington Peninsula areas for more than a decade.  An important part of the business is the marketing and management of new industrial business parks.

This is the first of four articles about industrial business parks in Moorabbin and Cheltenham. This article will provide some background information about industrial parks in these areas, and outline the main changes in the development of industrial parks seen in the past decade or so.  Future articles will focus on changes in usage over the past 10 years; changes in layout and construction in the past decade; and, expected changes across industrial parks over the next decade.

Usage in the Moorabbin and Cheltenham industrial business estates is diverse.  These generally have a high percentage of owners and tenants that carry out wholesaling activities; provide specialist professional and technical services; or, offer construction and building services.  Manufacturing and many other services are also offered by many businesses.

Nichols Crowder has conducted an analysis of 13 industrial business estates in Moorabbin and Cheltenham, comprising 270 individual sites or lots.  The average number of sites per estate was just over 20, with the smallest having eight properties, and the largest having 63.  The average property size was 254 square metres, ranging from 150 square metres to 300 square metres.

Over the next two to three years, a further 3 or 4 large industrial business estates will be developed in Moorabbin and Cheltenham, highlighting strong demand for commercial and industrial usage sites.

The development of industrial business parks in Cheltenham began with the rezoning of land from Industrial 1 to Commercial 2.  This resulted in an opportunity for developers to create these estates with smaller individual lots, and the opportunity to satisfy demand for a wider range of final uses by owners and tenants.  The smaller sizes reduced purchase costs for owners and encouraged a wider range of buyers, who were mostly owner occupiers.  In turn, lower-priced sites enabled owners to charge competitive rents, encouraging a diverse range of tenants and businesses.

There have been some significant changes in the layout, construction and use of industrial business estates and individual lots over the past 10 years.  Initially, industrial lots comprised a large storage area, a large roller door, and a single entrance door to a small reception area.  As more businesses moved into these estates that required larger offices, designs were amended to meet owner and tenant needs. 

Today’s lots tend to have a ratio of between 50% and 75% for warehouse, to between 50% and 25% for office, compared to the traditional 90% and 10%, respectively, 10 years ago.  The overall presentation of the industrial unit has also evolved, with more contemporary facades, stone and timber finishes, and funky industrial LED lighting.

Next month’s article looks at the types of businesses that are operating in the Moorabbin and Cheltenham industrial business parks today, and how these usages have changed in the past decade.