Why manufacturers can’t afford to wait on Pakenham

In response to mounting global uncertainties and supply chain vulnerabilities, Australia is undergoing a critical evolution: a decisive shift towards sovereign manufacturing capability. This strategic movement is not just about resilience, it’s about establishing an independent, future-ready manufacturing base that can support the growth capabilities of key sectors.

Amid these compounding challenges, businesses must act swiftly to adapt - because within uncertainty lies a significant opportunity for those ready to evolve and rethink where and how they operate.

“There is a clear evolution towards sovereign manufacturing capability. This shift indicates a move towards establishing a stronger, more independent manufacturing base onshore, likely in response to global supply chain disruptions and the need for local production capabilities in critical sectors,” said Andrew Ballantyne, Head of Research Australia, JLL.

In Victoria’s South East, this evolution is reshaping the industrial property landscape. Vacancy rates in the traditional heartland of Dandenong remain critically low, land availability is drying up, and gross occupancy rates are being driven up by increasing land taxes and rental growth. These pressures are pushing manufacturers to reassess their long-term property strategies.

In this evolving landscape, Pakenham is emerging as the solution for those occupiers seeking greater access to manufacturing infrastructure and lower gross occupancy costs.

Currently 50% of all buildings greater than 5000sqm are being used for manufacturing and production purposes in Pakenham. In response, developers are delivering core logistic assets with provisions for manufacturing capability to support this demand.

Only 237 hectares of developable land remain in key markets like Dandenong and Cranbourne. At the current absorption rate, supply is expected to be exhausted by 2030. Meanwhile, land costs have surged: in 2020, 1 hectare serviced blocks were averaging $550 per sqm. Today, that figure has soared to $950 per sqm.

Given this, Pakenham is emerging as the clear solution, offering infrastructure-ready land, lower gross occupancy costs, and the opportunity to future-proof operations.

“As manufacturing’s share of leasing activity continues to grow, adopting a first mover or fast-follower approach is essential. Those who wait risk being outpaced by competitors who seize the opportunity to evolve with modern warehouse solutions and enhanced operational efficiencies”, Ballantyne continues.

At a recent manufacturing event hosted by Brookfield Properties, JLL, Colliers and Cardinia Logistics Estate, the industrial and logistics industry gathered to dissect the current state of play - and the message was clear. Demand for smarter and more affordable warehouse solutions is surging.

“With ~100 occupiers in attendance, the event highlighted a clear appetite for warehouse solutions that drive efficiencies and improve the bottom line,” said Lachlan Ferguson, Director, Logistics and Industrial Victoria.

“Occupiers are actively looking for ways to reduce gross occupancy costs and improve operational output. Pakenham provides a compelling solution offering significantly lower gross occupancy costs compared to infill locations while delivering the infrastructure manufacturing businesses need to succeed”, Ferguson continues.

Offering an average gross effective rent of $135 per sqm compared to $175 per sqm in Dandenong South and $158 per sqm in Cranbourne West, Pakenham is not only more affordable, but also functionally viable.

A recent analysis undertaken by JLL’s supply chain team shows that while logistics costs may be higher, the lower rents, outgoings and labour costs translate into a saving of around 16% of annual rental expense.

From large hardstands, power, gas, and water to crane provisions, transport connectivity, and proximity to blue collar workers, Pakenham is ticking all the boxes for manufacturers seeking a future-proof warehouse solution. It’s no longer just about space, it’s about smart, scalable, cost-effective solutions.

The shift is already well underway. In Melbourne’s South East, manufacturing leasing requirements have jumped from just 6% of all leasing activity in 2021 to 39% in 2025. In addition, 23% of all leasing transactions in 2024 are attributed to manufacturers - a figure that’s only set to climb.

“Several manufacturers have already made the move, recognising that Pakenham offers the industrial scalability and affordability that’s increasingly rare elsewhere,” Ferguson adds.

For example, BekaertDeslee, a global textile company, has made the move from Dandenong South to Pakenham to a new purposed-designed facility to allow for improved workflow and efficiency.

As manufacturers continue to feel the pressure of rising costs and limited space, Pakenham is quickly solidifying its position as the next strategic step for manufacturing occupiers seeking a future-ready location.