IKEA splurges on distribution centre

FURNITURE giant IKEA has bought a 15-hectare site in Melbourne's west to house its national distribution centre.

FURNITURE giant IKEA has bought a 15-hectare site in Melbourne's west to house its national distribution centre.

The company has started work on the design and development of the first stage of what will eventually become an 80,000-square-metre warehouse, appointing construction firm FDC to build the complex, industry sources said.

It will be one of the largest industrial developments in Victoria in recent years, about four times the size of the MCG.

IKEA is famous for its products, which often need post-purchase assembly. Stores carry up to 9000 items of every possible colour, shape and size and house restaurants serving traditional IKEA meatballs.

IKEA was tight-lipped on details this week but industry insiders say it has exchanged contracts on a site at the Drystone Industrial Estate in Laverton North. Final settlement is expected at the end of the month.

The deal is believed to be worth about $15 million, valuing industrial land in Melbourne's outer west at about $100 per square metre.

IKEA denied it had finalised a land purchase, saying it was "currently focusing activity on its two existing Victorian stores located in Richmond and Springvale."

It was always looking to expand in all states, a spokeswoman said.

Ikea has seven Australian stores, including Sydney's Homebush and Tempe, two in Melbourne and others in Brisbane, Adelaide and Perth.

The South Australian and West Australian stores are run as separate franchises from IKEA Australia.

The once-Swedish (ultimate ownership is now housed in the Netherlands) flat-pack furniture retailer is also building a 41,000 sq m store in Campbellfield, in Melbourne's north.

Once finished it will be the largest free-standing store in Australia.

The Campbellfield complex is marginally bigger than the company's Sydney store at Tempe, which, at twice the size of the SCG and twice the length of the Harbour Bridge, is the biggest store in the southern hemisphere.

Other commercial developers bidding for IKEA's new warehouse business included Dexus, Goodman and Australand.

The Drystone Estate is a 95-hectare industrial park on the outskirts of the city in Dohertys Road, about eight kilometres from Melbourne's docks and close to the Princes Highway.

The estate's developer, Citius, would not comment.

The expansion of online and big-box retailers is prompting speculative industrial development, Colliers industrial agent Nathan Bingham said. Between them, Australand, Dexus and Goodman had "well over 100,000 sq m of new speculative space in the market", Mr Bingham estimated.

sjohanson@fairfaxmedia.com.au

Twitter: @simonjohanson

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