The inner metro and city-fringe locations once dominated Australia’s industrial real estate market. However, land scarcity and rising costs are limiting opportunities in core cities.
As a result, suburban industrial zones are emerging as more attractive options, offering better value, flexibility, and long-term growth. With infrastructural growth, business decentralisation, and rising demand for affordable spaces, outer suburbs are now becoming popular industrial locations.
In this article, we will understand why you should consider buying industrial real estate in suburban areas.
Higher Rental Yields in Lower-Cost Locations
Lower land and construction costs in suburban areas reduce upfront investment. This enables buyers to secure modern industrial facilities at more affordable prices. Ultimately, suburban industrial properties offer a higher net yield than inner metro locations.
These advantages are clear in suburbs such as Dandenong South, Sunshine West, and Thomastown, which have historically delivered higher yields compared to inner-city benchmarks.
Surging Demand from Logistics, Trade, and E-commerce
The demand for industrial space is increasingly concentrated in Melbourne’s outer-suburban growth corridors. Logistics, e-commerce, construction, and automotive operators are seeking warehouse and factory spaces close to residential growth zones and arterial road networks.
Suburban industrial property meets these needs by providing affordable land, larger footprints, and improved access to labour and transport. With the final-mile delivery becoming increasingly critical, decentralised warehousing is now a necessity.
Suburbs such as Truganina, Cranbourne West, and Epping have been in demand for industrial assets in recent years. This sustained tenant interest is reinforcing their long-term value for landlords and investors.
Capital Growth Driven by Infrastructure and Zoning Shifts
Suburban industrial real estate benefits directly from public infrastructure and strategic rezoning. Projects like the North East Link, Outer Metropolitan Ring Road, and upgrades to key freight corridors are improving accessibility to once-overlooked areas.
Moreover, local councils are planning and supporting industrial zoning to support future growth, particularly in places like Cranbourne West and Epping North. These improvements enhance connectivity, unlock underutilised land, support larger-scale developments, and attract new businesses to the area.
Buying ahead of major infrastructure completions presents an opportunity to increase property value and attract long-term tenants.
Reduced Vacancy Risk in High-Demand Corridors
Melbourne’s suburban industrial estates, especially Clayton, Campbellfield, and Keysborough, are known for low vacancy rates compared to many other industrial precincts. These locations offer the practical benefits for tenants, including proximity to major road networks, workforce populations, and sufficient space for vehicles and operations.
Ongoing demand from trades, storage, and distribution businesses, combined with limited new land availability, keeps occupancy high. For investors, this reduces the risk of extended vacancies and supports more stable income profiles.
In precincts with well-established demand and infrastructure, tenant turnover is often low. Plus, re-leasing and onboarding new tenants is comparatively quick and efficient.
Appealing Entry Point for Investors and Owner-Occupiers
Compared to inner-metro industrial property, suburban assets present a far more achievable entry point, both for private investors and owner-occupiers. Lower purchase prices, manageable deposits, and a wider variety of stock allow investors to acquire properties at different scales.
This affordability has also opened the market to self-managed super funds (SMSFs), first-time investors, and Small and Medium-Sized Enterprises (SMEs) looking to control occupancy costs. Owner-occupiers can secure premises tailored to operational needs while locking in long-term cost certainty.
In conclusion, suburban industrial real estate is emerging as a core strategy for investors seeking a balance of income, growth, and long-term resilience.
With higher yields, strong demand from logistics and e-commerce operators, and capital growth from infrastructure upgrades, suburban real estate investments have become a smart choice. Furthermore, the lower entry costs and strong leasing fundamentals make Melbourne’s outer industrial precincts an attractive opportunity for investors.
Connect with a reliable industrial real estate agency to explore investment opportunities in Melbourne’s suburban industrial market.
