Commercial property finance in Dandenong and Melbourne's south-east is mostly industrial lending: manufacturing buildings, warehouses and logistics sites across Dandenong South, Keysborough, Braeside, Carrum Downs, Pakenham and Cranbourne West. Industrial vacancy across the south-east precinct is 4.4% (Cushman & Wakefield, Q3 2026), and Knight Frank puts it at 4.1% against a ten-year average of 1.8% (Q2 2026). Over a third of the empty space sits in the newer Pakenham and Cranbourne West estates, so a lender reads an established Dandenong South warehouse and a brand-new Cranbourne West unit as two different propositions.
The south-east mixes established manufacturing and warehousing in Dandenong South, Keysborough and Braeside with newer estates in Pakenham and Cranbourne West and drive-through and large-format retail sites in the growth suburbs, and a lender reads each of those differently. The general framework (LVR, serviceability, interest cover, tenant covenant) is on our Melbourne commercial property finance page, and the national detail is in our commercial property finance guide. This page covers what's specific to the south-east corridor, using the latest published numbers from three research houses.
What do the research houses say about the south-east industrial market right now?
Each publisher counts a different pool of buildings, so their figures don't line up exactly. Cushman & Wakefield tracks buildings above 3,000 sqm, Knight Frank buildings of 5,000 sqm and above, and JLL its own tracked stock. Read each column on its own terms.
| South East precinct | Cushman & Wakefield, Q3 2026 | Knight Frank, Q2 2026 | JLL, Q2 2026 |
|---|---|---|---|
| Vacancy | 4.4% | 4.1% (ten-year average 1.8%) | 4.4% |
| Prime net face rent | $169 per sqm | $156 per sqm, up 9.4% in a year | Not published |
| Incentive | 25.0% | 23.3% | Not published |
| Yield | 5.75% average | 6.00% prime, 6.50% secondary | Not published |
| Prime capital value | $2,935 per sqm | $2,597 per sqm | Not published |
| Industrial land | $760 per sqm (1 to 5 ha lots) | $1,025 small, $765 medium, $250 large lots, per sqm | Not published |
| Take-up | 259,604 sqm year to date | 115,415 sqm in the first half | Not published |
| New supply | About 270,000 sqm due across Melbourne in Q4 2026, led by the south-east | 200,000 sqm forecast for the precinct in 2026, against 366,000 sqm in 2025 | Not published |
No publisher breaks these numbers out by suburb. Dandenong South, Keysborough, Braeside and Carrum Downs all sit inside the precinct averages above, which is why the sales evidence further down this page matters as much as the table does.
Where is the vacancy in Melbourne's south-east, and why does it matter for a Dandenong South loan?
Cushman & Wakefield's Q3 2026 report says Pakenham and Cranbourne West account for over a third of the available space across the south-east. Knight Frank tells the same story from its Q2 2026 data: new supply in growth suburbs "such as Pakenham and Cranbourne West" disrupted what had been a historically tight market, including a 39,000 sqm completion in Pakenham during the quarter.
That matters because a vacancy rate is an average across a precinct that runs from long-established Dandenong South lots to speculative estates still being built in the growth suburbs. When a valuer assesses a building for a lender, they look at the stock that actually competes with it: similar size, clearance, yard and location. A vacancy figure driven by new estates further out says less about a long-occupied Dandenong South building than the headline suggests. It says a lot about a new unit in those same estates, where the buyer may be competing for tenants against several empty neighbours.
For a borrower, the practical step is to ask the agent and the valuer which comparable buildings are currently vacant and for how long. That list is closer to the lender's view of re-letting risk than any precinct average.
Did south-east rents really rise 9.4%, or did incentives absorb it?
Knight Frank recorded the strongest rental growth of any Melbourne industrial precinct in the south-east, with prime net face rent up 9.4% to $156 per sqm over the year to Q2 2026. The same report puts incentives at 23.3%. Cushman & Wakefield's Q3 2026 figures are $169 per sqm face rent with a 25.0% incentive.
An incentive is the value a landlord gives back to secure a tenant, usually as months without rent or a fit-out contribution, expressed as a share of the face rent over the lease. At 23% to 25%, roughly a quarter of the headline rent on a new south-east lease is being returned to the tenant in some form. Face rent can rise while the rent the landlord actually keeps moves far less.
Lenders and valuers work from the effective rent, after incentives. If you're buying a leased south-east warehouse where the lease was signed recently, expect the lender to ask for the lease, any side deed or incentive deed, and any rent holiday still running. A building that looks like it yields 6% on face rent can value lower once a large incentive is netted off, and the loan follows the valuation.
What have Dandenong South industrial properties sold for in 2026?
Three dated 2026 sales in Dandenong South give valuers recent evidence to work from. Each was reported by The Industrialist.
| Property | Price and size | Detail | Reported |
|---|---|---|---|
| 111 Frankston-Dandenong Road, Dandenong South | $12.1m for 15,484 sqm of land, about $781 per sqm | Industrial site, private developer buyer, sold by CBRE | 4 Feb 2026 |
| 24-28 Williams Road, Dandenong South | $5.8m for a 1,930 sqm building on 4,663 sqm, about $3,005 per sqm of building | Industrial 1 Zone, 8 m clearance warehouse, private investor buyer, sold by Colliers | 24 Apr 2026 |
| 25-31 Licola Crescent, Dandenong South | Price not disclosed; 16,703 sqm of building on 33,690 sqm | Two-unit manufacturing and logistics facility, owner-occupier buyer, sold by Colliers | 10 Aug 2026 |
The two priced sales line up closely with the research houses. The Frankston-Dandenong Road site, at about 1.5 ha, sold for $781 per sqm of land, just above Cushman & Wakefield's $760 per sqm for 1 to 5 ha lots and Knight Frank's $765 for medium lots. Williams Road, at about $3,005 per sqm of building, sits just above Cushman & Wakefield's south-east prime capital value of $2,935 per sqm. When sales and published averages agree like this, a valuer has firmer ground, and a lender has more confidence in the number it's lending against.
Williams Road is also a useful picture of standard Dandenong South stock: a warehouse with 8 m clearance in the Industrial 1 Zone, the main zone for Victorian industrial land (our guide to where we lend explains the industrial zones a lender will see on a title). Buildings like this suit many occupiers, which helps when a lender asks what happens if the tenant leaves.
We couldn't find a dated, verifiable 2026 sale in Keysborough or Braeside. The nearest dated Carrum Downs evidence is older: 110 Frankston Gardens Drive sold off-market for $9.0m at a 5.2% net passing yield on a 10-year initial lease in August 2025 (Real Estate Source, 25 Aug 2025). For a property in those suburbs, expect the valuer to draw on Dandenong South and wider precinct evidence.
What does a lender weigh in Dandenong South, Pakenham and Cranbourne West?
These are the factors lenders commonly weigh on south-east property. They're illustrations of how an assessment runs, not lender policy.
Dandenong South
Deep comparable sales, Industrial 1 Zone land and 8 m clearance stock give valuers evidence to work with. Lenders focus on the building's age, clearance, yard and access, and on the tenant or the occupier's business.
Pakenham and Cranbourne West
This is where the precinct's vacancy and incentives sit. Valuers adjust face rent for incentives, and lenders look closely at the lease term and the strength of a newly signed tenant.
Manufacturing plant
Cranes, extrusion lines and heavy power suit one occupier well. A lender asks what the building is worth to the next occupier, since specialised fit-out adds little to an alternative-use valuation.
Buying your own premises
The Licola Crescent sale shows owner-occupiers still buy at scale here. The application is assessed mainly on the operating business's earnings, with the property as security.
Large-format and drive-through sites
Long net leases with fixed increases turn up in the growth suburbs and on the Frankston corridor. Lenders weigh the tenant's covenant, the lease length and what else the site could be used for.
How do lenders read an owner-occupied manufacturing building in Dandenong South?
When a manufacturer buys the building it trades from, the lender's first question is about the business. The property is the security; the operating company's earnings are what repay the loan. That's a different test from an investment purchase, where the rent and the tenant carry the application. Our article on financing one Melbourne warehouse as an owner-occupier or an investor walks through both paths. As a broad guide, owner-occupier loans often reach around 70% LVR against about 65% for a comparable investment loan, though the business and the asset decide where a given file lands.
Two Dandenong South specifics come up often. The first is fit-out. A building fitted with gantry cranes or a production line may be worth more to the current occupier than to the market, and the valuer is asked for market value, so specialised plant usually adds little to the figure a lender lends against. The second is ownership structure. Some owners buy through a related entity or a self-managed super fund and lease the building to their own business; our guide to SMSF borrowing for commercial property covers how that lending works once the structure is settled with your accountant.
Illustrative example: owner-occupier serviceability in Dandenong South
A manufacturer buys a $3.0 million Dandenong South warehouse to trade from. At an illustrative 70% LVR the loan is $2.1 million and the deposit is $900,000. Victorian duty on $3.0 million under the general schedule is about $175,000 (from our stamp duty calculator), assuming the property hasn't changed hands since 1 July 2024, so this purchase is its entry transaction into the Commercial and Industrial Property Tax reform, and later sales may be exempt from duty if the property keeps a qualifying use and the SRO conditions are met. That brings cash needed to about $1.075 million before legal and valuation costs.
Interest at an illustrative 7.23% on $2.1 million is about $151,800 a year. At an illustrative 1.5 times interest cover, the business needs about $227,700 a year of earnings available to pay interest. Those figures come from the company's financial statements, so the business's accounts carry this application, and the building's notional rent plays a minor part. If the business currently rents its premises, ask how the lender treats the rent it will stop paying, since that changes the earnings figure the cover test uses.
Illustrative only. Rates, LVRs and cover ratios vary by lender, asset and borrower.
Want to test those numbers against your own accounts? Get in touch with the purchase price and your last two years of results.
Does 270,000 sqm of new supply change the picture for Keysborough, Braeside and Carrum Downs?
Cushman & Wakefield expects about 270,000 sqm of new industrial space across Melbourne in Q4 2026, led by the south-east. The named projects are about 40,000 sqm at Rise Industrial Estate in Cranbourne West and new space at 48 Assembly Drive, Dandenong South. Two other numbers put that in context. Knight Frank forecasts 200,000 sqm of new south-east supply in 2026, down from 366,000 sqm in 2025, so the flow of new buildings is slowing. And Cushman & Wakefield reports that Melbourne's net absorption turned positive in Q3 2026 for the first time this year, led by the south-east and the west.
For Keysborough, Braeside and Carrum Downs, which are largely built out, new supply mostly competes with similar modern stock in the growth estates and on remaining Dandenong South sites. Where it does bite is on a lease that expires as new space completes nearby. A lender will look at when your lease ends relative to the completions around you, and a tenant with an expiry in 2027 is a different credit question from one locked in until the 2030s.
Our article on why banks decline commercial property loans covers short leases and vacancy among the common reasons a file stalls.
What about retail and drive-through sites in the south-east growth suburbs?
The south-east's population growth has brought net-leased retail with it. A drive-through in Cranbourne North sold for $5.845 million at a reported 5.3% yield on a 15-year lease with 3% fixed annual rises (realcommercial, 1 Sep 2026). On the Frankston corridor, a 5,142 sqm large-format retail site with net rent of about $337,198 was offered with an implied value of about $5.4 million at a large-format yield of about 6.25%, according to JLL's marketing; the site is about 150 m from a hospital and the agent named medical, allied health and childcare as alternative uses (realcommercial, 25 Aug 2026). The same report noted Victorian large-format retail has the lowest vacancy of any retail subsector.
A lender reads these assets mainly through the tenant and the lease. A national operator on a 15-year lease with fixed increases is strong income. The catch is the yield. The Cranbourne North sale was reported at $319,035 of net income a year, and at the illustrative 7.23% rate and 1.5 times cover that supports a loan of about $2.94 million, roughly 50% of the price. On low-yielding retail the income test, more than the LVR, usually sets the loan. For a site like the Frankston one, alternative uses matter too: if the lender can see a second use for the building, such as a childcare centre (see our guide to childcare centre finance in Melbourne), the security is easier to support.
If you're comparing the south-east with Melbourne's other logistics corridors, see our pages on industrial property finance in Melbourne's west and commercial property finance in Epping and Melbourne's north.
Questions about Dandenong South and south-east loans
Is Dandenong South industrial vacancy as high as the south-east headline suggests?
The data points lower, though no publisher reports Dandenong South on its own. Cushman & Wakefield puts south-east vacancy at 4.4% (Q3 2026) and says Pakenham and Cranbourne West hold over a third of the available space. Ask the valuer which vacant buildings compete with yours, since that list matters more than the precinct average.
What is a Dandenong South warehouse worth per square metre?
Recent sales give a guide. 24-28 Williams Road sold for $5.8 million in April 2026, about $3,005 per sqm of building, and 111 Frankston-Dandenong Road sold for about $781 per sqm of land in February 2026. Your value depends on clearance, site cover and lease, so make any contract subject to finance and valuation.
Can I buy my factory in Keysborough or Braeside through my business and borrow against it?
Yes. An owner-occupied purchase is assessed mainly on your business's earnings, and as a broad guide owner-occupier loans often reach around 70% LVR against about 65% for investment. A related entity or an SMSF can also hold the property, a structure to settle with your accountant. Bring your recent financial statements to the first conversation.
Will a lender discount a new warehouse in Cranbourne West because of the supply coming?
There's no set discount, but the valuer will weigh competing stock. Cushman & Wakefield expects about 270,000 sqm of new Melbourne industrial space in Q4 2026, led by the south-east and including about 40,000 sqm at Rise Industrial Estate. A signed lease with a known tenant does most to protect the valuation.
Do lenders treat a drive-through or fast-food site in Cranbourne differently from a warehouse?
Yes. A drive-through is assessed mainly on the tenant and the lease. A Cranbourne North drive-through sold for $5.845 million at a reported 5.3% yield on a 15-year lease with 3% fixed rises (realcommercial, 1 Sep 2026). At yields that low, rental income often limits the loan before LVR does, so test serviceability first.
Sources. Cushman & Wakefield, Melbourne Logistics and Industrial MarketBeat, Q3 2026. Knight Frank, Melbourne Industrial State of the Market, Q2 2026. JLL, Q2 2026 Australian Industrial Market Analysis (17 Aug 2026). The Industrialist sale reports of 4 Feb, 24 Apr and 10 Aug 2026. Real Estate Source, 25 Aug 2025 (Carrum Downs). realcommercial, 1 Sep 2026 (Cranbourne North) and 25 Aug 2026 (Frankston). Duty figure from the FGO stamp duty calculator, Victorian general schedule. Rate, LVR and cover figures in the example are illustrative assumptions, not lender policy.