Melbourne is a bustling metropolis that has long been regarded as one of Australia’s most prosperous and vibrant cities. The city’s diverse economy has attracted businesses worldwide, making it a hub for commercial real estate investment. With a range of different suburbs and localities, it can be challenging to pinpoint the best locations for commercial property in Melbourne.
We will provide you with an overview of the top locations that offer the most promising investment opportunities in commercial real estate in Melbourne. Whether you’re a seasoned investor or a business owner looking to expand, this article is sure to give you a head start in your search.
Importance of location in commercial real estate investing
Location is a crucial factor when it comes to commercial real estate investing. For investors, finding a property in a reliable location that can generate a good rental return and capital growth is essential. Investors should consider proximity to public transport and essential services, an easily identifiable position, and infrastructure that supports the location, population size, and projected growth. A good location can increase the demand for the property and ultimately affect its value.
The best locations for commercial real estate property in Melbourne
Melbourne is an attractive city for commercial property investment due to its thriving economy and diverse industries. The best commercial real estate property locations are in Melbourne’s CBD, suburban areas, and emerging locations.
The CBD is perfect for finance, law, and tech businesses, while suburbs attract families and skilled professionals, making them ideal for medical centres, childcare centres, and service providers. Emerging locations such as Fitzroy, Collingwood, and Richmond are popular for office developments and industrial properties. Melbourne’s Western and Northern suburbs are also gaining popularity among investors as more companies and small businesses move to these areas.
Melbourne CBD
Melbourne CBD is one of the best locations to own a commercial property in Melbourne due to its strategic location and numerous benefits. One of these benefits is the high demand for office space, which translates to high rental returns for commercial property investors. The CBD also attracts businesses across various industries, including finance, law, and technology, making it a hub for innovation and creativity.
Additionally, owning a commercial property in Melbourne CBD means having access to excellent public transport, making it easy for workers and clients to access the property. The location also boasts a wide range of amenities, such as restaurants, cafes, bars, and shopping centres, attracting diverse people.
Suburban locations
Suburban locations in Melbourne are ideal for commercial property investment due to their lower costs and growth potential. These locations offer spacious land areas at reasonable prices compared to those in the central business district. Suburbs such as Clayton and Glen Waverley have become popular for established tech companies, while Ringwood and Mitcham are thriving with up-and-coming businesses.
Additionally, businesses that require a large space would benefit greatly in suburban locations, such as warehouses, storage facilities, and distribution centres. Suburban areas can also cater to businesses centred around community needs, such as childcare centres and healthcare clinics.
Emerging locations
Emerging locations can offer great potential for commercial property investors in Melbourne. These locations may have lower prices than established areas, but they also have the potential for significant growth. Some benefits of owning property in emerging places include the potential for higher yields and capital gains.
Additionally, businesses that require larger spaces or outdoor areas may prosper in these areas due to lower land costs. Some of Melbourne’s most promising emerging locations include Sunshine, Box Hill, and Footscray. These areas are transforming into thriving commercial hubs due to increasing infrastructure, population growth, and community development. Businesses that can thrive in emerging locations include cafes, restaurants, and specialty retail shops.
Melbourne’s Western Suburbs
Melbourne’s Western Suburbs offer excellent opportunities for expanding your commercial property portfolio. As the economy moves forward, more jobs are being created, and more companies are being set up in the region, making it an ideal location for investment. Additionally, the rise in population and the unaffordable residential property prices in the city are causing people to move to the suburbs, making commercial properties in the region even more lucrative.
The Western Suburbs has become a sought-after location, with corporations and small businesses eyeing this region due to its affordability and thriving business atmosphere. With a diversified economy and a growing skilled migrant population, it’s no wonder that Melbourne’s Western Suburbs are a top choice for investors looking to expand their commercial property portfolio.
Melbourne’s Northern Suburbs
Melbourne’s Northern Suburbs are becoming popular for those looking for cost-effective living in a thriving environment. With cheaper housing options and prestigious schools, this area has experienced a growth in the concentration of skilled professionals settling down. Located near the CBD, it offers a range of amenities and a lifestyle that is second to none. The suburbs have outperformed Melbourne’s house price growth, and their popularity is set to increase with the rising population and corporations heading towards the area.
For investors, this presents a great opportunity to build office complexes and commercial buildings that cater to the needs of the growing population. As more people move to the suburbs, these areas have become a hotspot for commercial real estate investment. Melbourne’s Northern Suburbs is worth considering if you want to expand your property portfolio.
Advantages of commercial property investment
Potential for Higher Returns
Commercial properties, such as office buildings, retail spaces, and warehouses, often generate higher rental income than residential properties. This means that you can earn higher returns on your investment.
Long-Term Leases
Commercial tenants usually sign longer leases than residential tenants, meaning you have a more stable income stream. In addition, commercial leases often include rent increases linked to inflation or market rates, which can help protect your rental income against inflation.
Diversification
Commercial property investment can offer diversification to your investment portfolio. It is an alternative investment class with a low correlation to other asset classes, such as equities and fixed income.
Capital Growth Potential
Commercial property values in Melbourne have a history of increasing over time due to the city’s strong economy and growing population. This provides the potential for capital growth and appreciation over the long term.
Tax Benefits
Commercial property investors in Melbourne can claim tax deductions on expenses related to their investment, such as property management fees, maintenance costs, and depreciation. This can help reduce your taxable income and increase your after-tax returns.
Professional Property Management
Commercial properties typically require professional management to ensure the property is maintained, tenants are managed, and leases are structured properly. Skilled property managers can help with property maintenance, tenant selection, rent collection, and lease renewals.
Overall, commercial property investment in Melbourne can provide higher returns, diversification, capital growth potential, tax benefits, and professional property management.
Investing in commercial real estate can diversify your portfolio and generate steady income. However, location plays a crucial role in the success of any commercial property investment. Melbourne offers a range of great places for commercial real estate investment, including the bustling CBD, suburban areas, and emerging neighbourhoods. Each site has unique benefits and is suited for different types of businesses. By understanding the benefits of each location and carefully considering your investment goals and strategy, you can make an informed decision and maximise the advantages of commercial property investment in Melbourne.
If you’re looking to invest in commercial real estate in Melbourne, Axis Property is your ideal choice. As a boutique commercial real estate agency, Axis Property has extensive experience in the Melbourne property market and offers a range of commercial properties suitable for different investment needs. Whether you are looking for small retail shops or large-scale warehouse complexes, we can help you find the perfect property that meets your requirements. Contact us today to learn more about our services and how we can assist you with your commercial property needs in Melbourne.