Australia is witnessing a global trend arrive on its doorstep: the rapid expansion of data centre infrastructure. As digital demand surges worldwide, Melbourne is emerging as the nation’s ideal location for new data centre developments—thanks to its unique geography, affordable land, and supportive government policies.
The GrayJohnson 2025 Economic and Property Market Update states the city’s industrial property sector is already showing resilience and adaptability in the face of sticky inflation and shifting global investment patterns. Now, these same strengths are positioning Melbourne to become Australia’s data centre capital.
Melbourne’s physical environment offers a rare combination of advantages for data centre operators. The city’s relatively flat terrain and mild climate are especially beneficial for large-scale facilities, where cooling costs can make or break profitability. Unlike hotter northern cities, Melbourne’s temperate weather reduces the energy required to keep servers running efficiently, lowering operational costs and supporting sustainability goals.
Industrial land values in Melbourne’s north and west remain significantly more affordable than in other major Australian cities. GrayJohnson’s report notes that land in these regions averages $850–$1,000 per square metre for sites between 1ha and 5ha—well below inner-city prices. This affordability, combined with ample space and proximity to major transport and power infrastructure, makes the north and west prime targets for data centre investment.
Recognising the economic and technological opportunity, the Victorian Government has declared its ambition to make Melbourne the national leader in data centre development. Recent policy announcements have focused on streamlining planning approvals, investing in energy infrastructure, and promoting the city’s competitive advantages to global tech firms.
These reforms build on broader productivity-enhancing measures announced by state and federal treasurers, aimed at accelerating construction and unlocking new industrial capacity. By reducing red tape and supporting high-tech investment, Victoria is positioning itself at the forefront of Australia’s digital transformation.
GrayJohnson’s economic report highlights a sobering trend: manufacturing employment in Victoria has declined over the past 12 months, reflecting broader shifts in the national economy. However, the rise of data centres offers a pathway to replace lost jobs with new opportunities in construction, operations, and technology services.
Data centre projects require a diverse workforce—from skilled trades and engineers to IT specialists and facility managers. The clustering of these facilities in Melbourne’s north and west could help revitalise local economies, providing long-term employment and supporting the transition to a knowledge-based economy.
Despite economic headwinds, Melbourne’s industrial property market remains robust. Leasing activity is underpinned by logistics, e-commerce, and population growth, with vacancy rates holding steady at around 3%. Investor appetite is strong, with over $700 million in industrial property transacted in 2025 to date. The city’s ability to attract both domestic and international investment is a testament to its infrastructure, workforce, and strategic location.
As data centre operators seek large, affordable sites with reliable power and connectivity, Melbourne’s industrial market is uniquely positioned to meet their needs. The city’s pipeline of new supply, particularly in the north and west, is expected to support continued growth in the sector.
With global tech giants and local developers eyeing Melbourne for their next data centre projects, the city stands at the threshold of a new era. GrayJohnson’s century of market expertise and local insight will be crucial for investors, landowners, and policymakers navigating this transformation.
For those interested in exploring opportunities in Melbourne’s evolving industrial landscape, GrayJohnson’s team offers tailored advice and market intelligence. To discuss investment strategies, site selection, or the latest trends in data centre development, contact specialists at grayjohnson.com.au or reach out directly to the Melbourne office.
Melbourne’s data centre boom is more than a property story—it’s a sign of the city’s resilience, adaptability, and ambition to lead Australia’s digital future.
Click here to read the full GrayJohnson 2025 Economic and Property Market Update.
