Industrial assets in demand
One of the latest is a development with a mixed-use zoning in Sydney's south-west slated to be auctioned in June through Stonebridge Property Group directors Philip Gartland and Lincoln Blackledge.
The 15,000-square-metre, four-level building was built in 2008 and is offered for sale by the receivers and managers Shaun Fraser and Joseph Hayes of McGrathNicol.
The asset at 32 Queen Street, Campbelltown is on a 1.45-hectare site and is zoned as a 10(a) regional comprehensive centre.
Mr Gartland said he expected very strong interest in this property as it had potential for a wide variety of uses across traditional retail, mixed-use and owner occupiers.
"The property has exposure to both the Moore Oxley bypass and Queen Street and is set to benefit from major residential development planned to accommodate the area's growing population," Mr Gartland said.
The senior director of NSW industrial at CBRE, Jason Edge, said investor confidence in Sydney's industrial market remained stable.
"Sydney's high-yield performance continues to attract the interest of investors, particularly those looking to develop quality assets in the rapidly growing western region," Mr Edge said.
But in the leasing market, there remained caution, with shorter terms and sub-lease leases becoming popular.
In the western precinct the director of Savills industrial NSW Darren Curry has tracked more than 256,000 square metres of pre-lease inquiries in 2013, the majority of them from major logistics companies and bulky goods retailers seeking between 25,000 and 45,000 square metres.
"This has been on the back of companies consolidating occupancy, improving warehouse configurations coupled with a flight to quality," Mr Curry said.
Knight Frank national industrial director Eugene Evgenikos said that despite a lack of well-leased stock available for sale, sales volumes were continuing to pick up due to a transition towards more value-added sales by many local players seeking high-yield opportunities, for example the recent sale of 11-21 Forge Street in Blacktown.
"In 2012, the transaction activity was being driven by strong demand for well-leased, core assets, particularly from offshore investors. Although this demand is still present in the market, there is a chronic shortage of such assets available for sale," he said.
"Recently we have been experiencing the bulk of transactions [by number] being driven by investors who are now keen to look up the risk curve to unlock property opportunities to take on re-leasing risk in return for a higher yield. Private buyers in the sub-$20 million range have been notably active."
Frequently Asked Questions about this Article…
Sales of industrial assets are rising because demand is growing for warehouse storage, distribution centres and land for redevelopment. Investors are attracted to high-yield opportunities, operators are consolidating occupancy and improving warehouse configurations, and there’s a flight to quality that’s encouraging transactions and redevelopment activity.
The Campbelltown asset at 32 Queen Street is a four-level, 15,000-square-metre building on a 1.45-hectare site, built in 2008 and zoned 10(a) regional comprehensive centre. It was slated for auction in June through Stonebridge Property Group directors Philip Gartland and Lincoln Blackledge and is being sold by receivers Shaun Fraser and Joseph Hayes of McGrathNicol. The property has exposure to the Moore Oxley bypass and Queen Street and is considered suitable for traditional retail, mixed-use or owner-occupiers.
Investor confidence in Sydney’s industrial market was described as stable. According to CBRE’s NSW industrial senior director Jason Edge, Sydney’s strong, high-yield performance continues to attract investors—particularly those targeting development of quality assets in the rapidly growing western regions.
The leasing market is showing more caution, with shorter lease terms and sub-lease arrangements becoming popular. This reflects tenants and landlords adapting to shifting demand and risk preferences in the industrial sector.
In Sydney’s western precinct, Savills’ industrial director Darren Curry tracked more than 256,000 square metres of pre-lease enquiries in 2013, mostly from major logistics companies and bulky-goods retailers. Many of these enquiries sought large footprints—typically between 25,000 and 45,000 square metres.
Sales volumes have picked up because many local players are shifting to value‑added sales—buying assets where they can add value themselves. Investors are increasingly willing to accept re‑leasing risk in order to secure higher yields, and private buyers (particularly in the sub‑$20 million range) have been notably active.
‘Looking up the risk curve’ means investors are pursuing higher-return opportunities by taking on more risk—such as buying assets that aren’t fully leased and accepting the re‑leasing risk with the aim of capturing higher yields once they reposition or re-let the property.
Planned major residential development in the area is expected to support demand because a growing local population can improve catchment for retail, service and mixed‑use outcomes. The Campbelltown property’s exposure to key roads and nearby planned housing was cited as a benefit that could increase interest and potential uses for the site.
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