Hot competition driving sales of Melbourne’s warehouse apartments and conversions

4 min read

Warehouse apartments and converted industrial buildings are achieving some strong prices in Melbourne – and it’s easy to see why.

One factor pushing up demand for warehouse spaces is the major trend of people working from home, which is nowhere more evident than in Australia’s inner-urban areas. The work-from-home phenomenon is not merely a response to Covid-19. It’s a reflection of broader societal change and it looks set to underpin many peoples’ property choices for the foreseeable future.

Another key driver is the rising consumer demand for roomier and ultra-contemporary living spaces. Warehouse apartments frequently tick all the wish-list boxes for 20- and 30-something buyers, active downsizers and people who are renting.

Nelson Alexander Northcote-based Partner and Auctioneer Luke Sacco is seeing stepped-up competition for warehouse apartments and conversions.

Mr Sacco recently auctioned a secluded warehouse conversion at 41 Lilly Street, Clifton Hill. The two-bedroom property drew bids from four bidder groups and sold for the above-reserve price of $1.21 million.

“Warehouse conversions are often seen by buyers as an in-between or ‘middle space’,” Mr Sacco notes. 

“They can appeal to people who do not want to buy an apartment but who sometimes cannot afford a single-fronted terrace. A warehouse conversion can give you more space and more accommodation without having someone else on top of you. There is always a strong demand for a space like that.” 

The Clifton Hill apartment was located centrally in Clifton Hill Village and set over two levels with two double bedrooms. The main bedroom included a private terrace, plus a study area, and there was also a secure garage, open plan kitchen and a courtyard.

Another warehouse apartment in Fitzroy sold recently by Nelson Alexander was oversized and also set over two levels. The large one-bedroom property (occupying 70 square metres) at 3/496 Fitzroy Street, Fitzroy sold in November for $618,000. It is currently leased out and returning approximately $1,825 per calendar month.

With their large, open-concept living areas and sleeping quarters that are often privately tucked away upstairs, warehouse properties are extremely popular with tenants. 

Across different demographic groups, warehouse properties are highly favourable because they tend to be extremely low maintenance and usually have ample built-in storage.

Agents say most of these homes don’t have a lot of outdoor garden space to care for, which makes them popular among downsizers.

Most warehouse homes also tend to be positioned in very connected, well-located suburbs, adding another important drawcard. Typically, converted warehouse spaces are found in areas close to transport, village hubs and restaurants. They’re also generally within walking distance of the CBD, which makes them very appealing to the executive market.

Perhaps the most important factor underpinning growth with this property type is that warehouse conversions have the runs on the board when it comes to investment fundamentals. These days many are generating an above-market rate of capital appreciation.

The unique, character-filled nature of warehouse/factory conversions is their greatest selling point.

High ceilings, exposed timber beams, unusual floorplans and size are the big attractions, along with timber floors, brickwork and arched or simply overly large windows and lofts.

Nelson Alexander’s 15-office network is tracking an increase in the development of new warehouse apartments and conversions, including a growing number in outer areas such as Essendon, Strathmore and Ascot Vale. 

Buyers and renters who favour conversions tend to dislike long corridors and small rooms.

Converted space is used in a more contemporary way that is mostly open plan and does not have long hallways.

Mr Sacco says whenever warehouse conversions are listed for sale in Northcote they almost always sell very strongly.

These days, a large cohort of younger owner-occupier buyers view warehouse properties as “the new single-fronted terrace” and their preferred first entry point into the property market.

More than ever, they are aware that if they own a good warehouse apartment in a good street, they can rest assured that it will appreciate in value.

If you would like to discuss buying or selling a property, please contact any Nelson Alexander office.

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