Sydney-based developer Abadeen Group is preparing to break ground on the second stage of its prime industrial park in Alexandria, the suburb’s only off-the-plan mixed-used development.
Abadeen snapped up the 4500sq m site at 78 O’Riordan Street occupied by two ageing warehouses for $23 million in early 2021.
Soon after, the developer put forward Rothelowman-designed plans for a mixed-use development dubbed HQ78.
The industrial precinct will be divided into a variety of multi-use spaces, including window-fronted retail showrooms, commercial offices and hi-tech warehouse spaces with suites that can be converted into creative workspace, studios, and workshops or storage.
The development will feature 800sq m of retail space, 2000sq m of office space with floor plates ranging from 100sq m to 600sq m, and 4600sq m of warehouse space ranging from 95sq m to 240 square metres.
Abadeen, alongside Platform Project Services—a boutique full-service development management company overseeing a number of residential, commercial and mixed-use projects in Sydney—is preparing to begin construction on the ambitious project.
Platform Project Services managing director Matthew Billing, who will speak at The Urban Developer’s coming Industrial Development vSummit, said the diverse project made sense in Alexandria—a fast-evolving mixed-used suburb 7km south of Sydney’s CBD.
“In city fringe areas, such as Alexandria, industrial land is scarce and prospective occupiers are no longer just warehouse or storage tenants,” Billing told The Urban Developer.
“As the type of industry changes, development in these areas needs to cater for a wider range of uses and those tenants expect more from their building.”
The planned industrial precinct will be neighboured by well-known names in the luxury market including Mercedes, Porsche, BMW, Bentley, Red Bull, Poliform, Zimmermann and Karen Willis Holmes.
It will also be well serviced by air freight and shipping—it is only 2km from Sydney Airport and 9km from Port Botany.
Alexandria, which in recent years has transformed from being Sydney’s industrial epicentre into a mix of light industrial, residential, logistics and warehouses, has continued to rapidly diversify from its industrial roots with an increase in high-end office developments.
Combined with commuter rail access—there are stations at Green Square and Mascot—more businesses are migrating to the city-fringe suburb.
During the past decade the suburb has recorded a 20 per cent increase in small businesses as well as a 30 per cent increase in population growth.
Buoyant demand for Sydney industrial property has pushed up average capital values by 26 per cent over the last two years.
Prime net face rents are also accelerating across the country with double-digit face annual rental growth in many markets. Incentive levels are falling in Sydney to single digits.
Driving up rents is the e-commerce boom, which has fuelled demand for last-mile logistics facilities close to major urban centres while driving down industrial vacancy rates to a record lows.
Over the past year, industrial yields have fallen by 70 basis points in Sydney’s southern suburbs to 3.8 per cent while industrial capital values have risen 27 per cent to $5700 per sq m, and rents increased 7 per cent to $220 per square metre.
“Demand for industrial assets is going to continue to grow and you will see a diversification between the asset class based on location, usage and tenants,” Billing said.
“South Sydney will be a more resilient sub-market, as it is supported by major strategic transport gateways and the close proximity to Sydney's inner-metro region. Those who need larger footprints will gravitate further out of Sydney.”
Billing will present a case study-led presentation on HQ78 at The Urban Developer’s coming Industrial Development vSummit on Thursday, June 23.
The vSummit will include a keynote presentation by CBRE’s Sass J-Baleh as well as more than 15 industry experts to discuss the latest research and perspective on the current state of the industrial and logistics sector and its outlook for the future.
To register for the event, click here.
