Industrial logistics: DC sells for $70M in Sydney’s South West

Australia’s largest listed pure-play industrial REIT, Centuria Industrial, has secured an off-market industrial facility at 82-92 Rodeo Road, Gregory Hills for $70 million.

Situated within Sydney’s South West growth corridor, the 22,439 sqm logistics facility demonstrates investor demand for super prime industrial investments.

The sale was assisted by Colliers’ Gavin Bishop, Sean Thomson and Fab Dalfonso.

“This transaction represents the growing desire for private entities to sell their properties off-market, capitalising on the significant tailwinds within the industrial and logistics sector,” said Gavin Bishop, Head of Industrial Capital Markets, Australia.

“Demand for high-quality distribution centres continues to strengthen off the back of the continual rise of the digital economy. Secular trends fuelling modern logistics companies are requiring larger warehousing to cater to the more sophisticated needs of tenants,” Bishop said.

Sean Thomson, Director of Industrial Capital Markets Australia, also affirmed that the shift in investment allocations towards the industrial and logistics sector has added significant depth of capital to the market, driving yields to record lows.

“Nationally, prime industrial and logistics yields have compressed 110 basis points over the past 12 months, with prime yields along the eastern seaboard now averaging 3.85% within core markets as of Q3 2021,” Thomson revealed.

“The outlook for further compression is favourable, as the spread to the risk-free rate remains broadly in line with the long-term average,” he said.

He added that further yield compression in the sector would bring prime yields in Australia more in line with key global markets such as Hong Kong, London, and America where prime yields are closer to 3.5%.

As of last month, Colliers also helped CIP transact the largest standalone asset within Australia this year for the $200.2 million super prime grade industrial facility at 56-88 Lisbon Street, Fairfield.

Colliers believes that to secure high-quality industrial assets within Sydney, prospective purchasers must be right in line with the current market parameters and factor in the strong market sentiment. There is a robust possibility that capitalisation rates for prime industrial facilities will hit sub 3.25% by the end of 2021.

Fab Dalfonso, National Director Industrial, said that the strong performance of the Sydney industrial and logistics market has continued throughout 2021 with significant momentum being recorded in the occupier markets.

“Macro drivers for industrial and logistics tenancy demand, such as growth in e-commerce and infrastructure investment, continue to support leasing activity across the Sydney market, with approximately one million sqm in occupier requirements currently in the market,” Dalfonso said.

Colliers revealed that the Australian industrial and logistics sector has been the best performing commercial property sector over the past 12 months, as strong fundamentals support elevated demand levels within both the occupier and investment markets.

Source: Colliers