The Fourth Innings: Melbourne & Old Trafford

This week we move onto Melbourne: home to the cricketing cathedral of the MCG and the iconic Boxing Day test. For readers of a certain vintage however, there was disappointingly little market research analysis from the Melbourne suburb of Erinsborough into recent footfall into Howard’s café, vacancy rates in Paul Robinson’s Lassiter’s Complex, or rental amounts of $/sqm p.a. of Dr Kennedy’s GP Practice. On the cricketing front and in this season of goodwill and peace to all men, it is life affirming to see both the Australia and England teams united in the fact that Snikco needs to be sent back to the pavilion for good! 

Oscar: Boasting internationally renowned sporting events across tennis, AFL and Formula 1, Melbourne is widely regarded as Australia’s sporting capital.  Anchored by the iconic Melbourne Cricket Ground, it also plays host to perhaps the most recognisable annual Test match in the cricketing calendar – the Boxing Day Test.  Melbourne’s sporting landscape has rebounded strongly in the wake of COVID-19 restrictions. In contrast, its commercial property market has toiled in the years since, although opportunity beckons for those who believe in the city’s long-term prospects.   

Melbourne’s office market has encountered significant headwinds in recent years, marred by subdued office attendance.  A moderate improvement in conditions has been witnessed lately, with vacancy declining to 18.8% (down 0.4 ppts) and net absorption of 5,100 sqm seen last quarter, marking the third consecutive quarter of positive demand.  NAB’s recently inked 63,000 sqm commitment at 700 Bourke Street, the largest office leasing deal of 2025, underscores this occupier appetite.[1]  Supply increased with four project completions adding 33,400 sqm, while five projects under construction will deliver 148,700 sqm by early 2028.  Prime gross effective rents rose slightly to $504/sqm p.a., while incentives remain elevated at 47.9%.[2]  Investment activity, although sparse in recent years, rebounded to $475.6 million. Headline transactions included the sale of Flinders Gate (PAG, $265.5 million) and 357 Collins Street (Stamoulis Property Group, $195.3 million).  With prime yields settling at 5.75%–8.50%, countercyclical opportunities are available for those with conviction in Melbourne’s fundamentals.[3] 

Victoria’s retail trade grew 2.8% year-on-year, supporting steady demand for food-focused and convenience retail.  Q3 completions totalled 30,300 sqm across five projects, including Melbourne Walk at Bourke Street Mall (5,600 sqm) and refurbishments like Pakenham Marketplace. Investment volumes were subdued at $303.2 million across 14 transactions, down from Q2’s record levels. Key deals included Mernda Junction sold to Charter Hall for $58.5 million, Charter Hall’s acquisition of Burwood One for $210 million and Bunnings Thomastown acquired as part of Wesfarmers’ portfolio for $63.7 million.[4]  Yields tightened in neighbourhood and large-format retail to 6.25% and 5.63%, respectively, reflecting investor confidence in defensive asset classes, consistent with the national trend.

Melbourne’s industrial sector, despite grappling with subdued interest, recorded its strongest quarter of 2025, with gross take-up of 283,100 sqm. Major transactions included Makita’s 35,000 sqm design-and-construct facility and Temple & Webster leasing 32,400 sqm at Troups Road Logistics Estate. Prime rents grew modestly in the North and South-East, but incentives remain elevated. Investment volumes fell to $427.2 million across 28 deals, dominated by smaller assets and private participants, with the South-East accounting for 64.7% of capital activity.  Prime yields stayed stable at 5.50%–6.25%, and land values averaged $1,146/sqm for 2,000 sqm parcels.[5]

Melbourne’s commercial property fortunes have not mirrored those of its Australian counterparts in recent times, nor has its market moved in sync with its booming sporting landscape.  Government policy settings, failing to incentivise capital, continue to steer both offshore and local investors elsewhere.  But never discount Victoria or a Victorian – the never say die spirit of Warne, Lawry and Stackpole, is a testament to that.  For those who believe in the city’s intrinsic qualities, long-term opportunities in Melbourne’s market are available for those with contrarian investment theses. 

 Oli: “The ball of the century, we can safely call it, was the very first from Shane Warne in a Test in England” is how it is fondly remembered. 

It is, of course, the delivery from the late, great Shane Warne to Mike Gatting on day 2 of the Old Trafford Ashes test on June 4th, 1993. 

The 23-year-old from Victoria arrived in England that summer with 11 tests under his belt and 31 wickets to his name. However, few could have predicted his selection for the Old Trafford test (which was offering such assistance to spinners to merit inclusion of both Phil Tufnel and Peter Such for England) and that delivery would go down in Ashes folklore as arguably the most memorable ball in its 150-year history. 

Manchester sport fans had witnessed other recent moments of greatness of course. The previous month Sir Alex Ferguson’s Manchester United had won the first of their 13 Premier League titles during his reign away at Wimbledon, but shortly before lunch on day 2 and down the road at the namesake of United’s ground, it was Warne’s fizzing leg-break that gained him national and international headlines, and his place in Ashes immortality. 

In the words of former England captain Mike Gatting after the 1993 series (which Australia comprehensively beat England 4-1): "Certainly by the end of the series we felt that there might be something more to this fella than we were led to believe." If that isn’t classic English understatement, I’m not sure what is. 

Surely after a trip down memory lane of the Spin King’s escapades back in ’93, any discussion of the Manchester commercial property landscape in 2025 would pale in comparison? 

Well, surprisingly not actually. Manchester has been rated (alongside my home city of Bristol) as the UK’s highest growth city across multiple real estate sectors between 2023 – 2033[6]. Such research is based on the fact that given Manchester boasts diverse industrial capabilities, excellent retail opportunities and a large student population, it is ranked top five in the UK for growth across (among others) office, retail, urban logistics and the student accommodation sectors. 

In the office sector, Manchester’s total of transacted square feet in the first half of 2025 was 581,500, the highest total of the “Big 6” (being Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester) of the year to date. Stand out transactions included IT infrastructure company Softcat, taking 35,400 square feet in one of the city’s newest technology hubs: the Manchester Goods Yard. Overall supply of Grade A office stock has increased too this year, with developments such as No. 3 Circle Square completing (ensconced in Manchester’s newly developed creative and technology district, located in the city centre around the “Oxford Road Corridor”), pushing new build vacancy rates in the city up to 1.7%[7].

Logistics continues to go from strength to strength around Manchester and the M6 corridor, with take up in the first half of 2025 rising to 16.8 million square feet and marking a 10% increase from H1 2024, which ourselves at Burges Salmon experienced first-hand while acting on the following acquisition: https://www.burges-salmon.com/burges-salmon-advises-tritax-big-box-reit-on-74-25m-acquisition-of-sainsburys-distribution-centre/. Much like the cluster of distribution and logistics centres centred near the M1 in Northamptonshire, Greater Manchester locations such as Warrington and Wigan continue to be popular with £532 million worth of transactions completing in H1 2025. However (and as is a familiar theme in distribution and logistics centres in the UK) demand is starting to rapidly outstrip supply with only under 1 million square feet under construction in the region at the moment, the lowest since pre-COVID. 

The commercial property landscape in Manchester could definitely be described as being “among the wickets” at the moment. Manchester’s mayor, Andy Burnham continues to beat the drum for economic growth and prosperity of the city with an enthusiasm akin to Victor Trumper’s century before lunch at Old Trafford in the 1902 Ashes, however, with continued doom and gloom abounding in the wider UK economy, whether Manchester’s bright commercial property landscape can continue over the next 12 months remains to be seen. 

Score Prediction: 

Oli: At the time of writing (and unless the ECB can convince Geoffrey Boycott to come out of retirement and sign a one-month temporary central contract) it is very difficult to see anything other than a comprehensive Australia victory in front of a raucous bumper Boxing Day home crowd at the G in the summer heat. The margin of victory however, remains to be seen. 

Oscar: England will be up against it to reverse the momentum of the series and claim a victory at the colosseum that is the MCG.  A vocal Victorian crowd will spur Australia on to victory and further add to England’s woes.  Marnus Labuschagne is yet to fully showcase his form in this Ashes series – however, Melbourne will be his moment, with a first innings century and Man of the Match honours to go with.  Joe Root will do everything he can to mount an English resistance, with a century to his name during the Test.

There is no Ashes rivalry between Minter Ellison and Burges Salmon. If you’re interested in learning more on investing in commercial real estate or conducting M&A in the UK, please contact us at [email protected] or [email protected]