Target on track to move to new distribution centre in Melbourne’s west

Target will build and occupy a new distribution centre to service its Victorian outlets. Photo: Paul Jones Target will build and occupy a new distribution centre to service its Victorian outlets. Photo: Paul Jones
杭州楼凤

Target will build and occupy a new distribution centre to service its Victorian outlets. Photo: Paul Jones

Target will build and occupy a new distribution centre to service its Victorian outlets. Photo: Paul Jones

Target is close to finalising a deal for a new 61,300-square-metre distribution centre in Melbourne’s west as part of a broader $300 million upgrade of its facilities in ‘s main cities.

The Wesfarmers-owned retailer is believed to have signed with a large western suburbs developer in Truganina, out of a possible shortlist of six, to build and lease the new megaplex​ which will consolidate and replace its existing Victorian distribution network.

Target set an October 2 deadline for signing a “heads of agreement” deal for the lease of a building similar to that negotiated by sister retailer Coles at its two-year-old 80,000 square shed in the TRUWEST​ Industrial Estate at 485 Doherty’s Road.

Wesfarmers’ preference was to co-locate the two facilities either in the same or neighbouring suburbs, requirements sighted by Business Day show.

Target currently operates from a purpose-built 41,000-square-metre centre in Altona North owned by Dexus Property Group. It wants to occupy the new centre no later than December 2016 on a 10- to 20-year lease with five four-year options.

The retailer, one of Wesfarmers’ key chains alongside Coles and Bunnings, has suffered a string of poor sales results, although this year it emerged from the wilderness to notch up its first rise, 4.7 per cent, in pre-tax earnings since 2010 under new boss Stuart Machin’s​ transformation strategy.

It has identified sites in Melbourne and Brisbane, and possibly Sydney and Perth, for buildings between 50,000 square metres and 70,000 square metres in a consolidation of its distribution network managed by Xact Solutions.

A substantial new space of Target’s size will further consolidate the western suburb’s status as Melbourne’s largest industrial submarket.

It has overtaken the south-east for the first time and now boasts 4.93 million square metres of major industrial space above 10,000 square metres, according to the latest Urbis Melbourne Industrial Vacancy Study.

Urbis director Shane Robb said the west’s vacancy rate had risen 2.1 per cent over the previous six months to 5.9 per cent in August while Melbourne’s overall industrial vacancy rate was 4.75 per cent, up slightly from the previous February.

Mr Robb said the rise, in part, was due to substantial construction of new space across the sector with 430,000 square metres added to date this year.

“We’re expecting around 500,000 [square] metres by end of year. That’s effectively double what it was in 2013,” he said.

Colliers International industrial director Nick Saunders said, while the number of leasing deals completed in Melbourne’s west were down on five-year average terms, businesses were being spurred to relocate by large incentives and a growth in business activity.

“What’s driving relocations is contracts. Businesses are being awarded more work and that’s driving them to take on larger places,” Mr Saunders said.

The pre-lease market was “super aggressive” with net effective rents around $45 to $50 per square metre. But buildings larger than 15,000 square metres were proving slower to fill, he said.


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