The trend has largely been driven by online sales, a key factor behind continued growth in demand for warehouse and distribution centres.

Transport and logistics accounted for 320,330 square metres or 36 per cent of the 891,964 square metres leased over the year to March, Savills Australia researcher Monica Mondkar said.

"Melbourne's industrial market has traditionally been home to a wide range of occupiers including manufacturing, engineering and wholesale, however demand from transport and logistics over the past two years has been increasing steadily and the rise in online retailing has been a key driver," Ms Mondkar said.

Strong pre-commitments to take up industrial space were also contributing to growth as was a shortage of serviced lots which has led to significant hikes in land values in some precincts, she said.

Household goods and housing construction have also driven demand for industrial space with Victoria the centre of a population explosion, outstripping all other capitals.

The state has four of the five fastest growing suburbs in Australia with population growth at 2.4 per cent, the latest ABS data shows.

Anmar and Isuzu trucks recently committed to a purpose-built facility (37,000 square metres) in Dexus' industrial estate on Foundation Road in Laverton North.

Another transport-related business, Seaway Logistics, leased 16,144 sq m at 11-25 Toll Drive in Altona North and Metro Trains took 24,065 sq m at 610 Heatherton Road in Clayton South.

According to Cushman & Wakefield's latest Industrial Market Snapshot, most large-scale leasing has been on the western side of the city, although available space in the east and south-east remains tight.

"In reflection of limited vacant space, prime net face rents in the east and south-east markets have shown strongest rental growth, increasing by 11 per cent and 12 per cent over the last six months to $90-$100 and $85-$95 per sq m respectively for assets less than 4,000 sq m and less than 6,000 sq m," it said.

Industrial investment totalled $200 million in the first quarter of 2017, a considerably stronger result than the $95 million recorded in the same period in 2016, it said.

The western sector recorded the largest investment volume, $115 million, for the second consecutive quarter, underpinned by Deutsche Asset Management's acquisition of 45 Fulton Drive in Derrimut for $36.1 million and Cache Logistics Trust's purchase of 217-225 Boundary Road in Laverton North for $22.2 million.

Savill's head of industrial and leasing Greg Jensz said the strong pre-commitment market was being driven by attractive rental deals and lack of suitable stock.

"In some cases tenants are finding more attractive rental agreements than available with existing buildings but this has generally been negotiated over longer, circa 10 year lease arrangements," he said.

"Land prices are through the roof due to a severe shortage of available serviced land. Small lots in the north are now going for up to $325 a sqm and lots of one hectare plus have sold for up to $250 a sqm, while in the west small lots are achieving $275 a sq m and one hectare plus up to $210 a sqm," Mr Jensz said.