The next stage of Brickworks and Goodman Group’s joint venture Oakdale East project is marching ahead after winning approval from the NSW government.
The Oakdale East Estate is set on more than 50ha in Western Sydney—the second stage will comprise a further 260,000sq m of gross lettable area.
A lease pre-commitment has been inked for a 57,378sq m distribution facility on the site, which would be 16.8m high, and include a 20,960sq m concrete mezzanine and 3.7MW of solar panels.
Brickworks managing director Lindsay Partridge said construction on the facility would begin once approved, with a completion date slated for mid-2025.
“We are very pleased to secure planning approval for this next phase in Oakdale’s development, extending our development pipeline by another five years,” Partridge said.
“The significant lease pre-commitment for the first facility at the estate is a key milestone and reflects the ongoing strong demand.
“In an extremely tight industrial property market, we are able to offer prospective tenants large lot sizes in prime locations, facilities of unrivalled quality and a proven track record of delivering new developments on time and on budget.”
Brickworks sold Oakdale East Stage 2 into the Industrial JV Trust with Goodman Group for $301 million in December last year.
The 75ha site has an estimated 50ha of net development area and comprises a brick plant and associated quarry, operated by Austral Bricks.
The industrial joint-venture partnership has grown significantly during the past decade across Australia and North America.
Brickworks and Goodman Group extended the partnership to create a Manufacturing Joint Venture in 2022 and Partridge says across the two trusts the annualised rent was $178 million.
Partridge said there had been a 48 per cent increase in prime market rents in Western Sydney in the past 12 months and the development of Oakdale Estate Stage 2 and Oakdale West would enable the JV to capitalise on strong market conditions.
“Based on current market rates, new developments at Oakdale West and Oakdale East Stage 2 will deliver around $90 million of additional rent to the Industrial JV Trust with Goodman,” Partridge said.
“The development activity at these estates is being funded by the JV. Importantly, it is not anticipated that additional capital will be required from Brickworks into the JV, with the value of our land contribution at Oakdale East being matched by development funding from Goodman, and low gearing levels providing ample debt funding headroom.
“Including the mark-to-market rental uplift on existing leased assets that will be progressively realised as leases are renewed, the total rent potential of the Brickworks Property Trusts is around $350 million (100 per cent share), almost double the current passing rent.”
Oakdale West will be one of the biggest parcels of industrial-zoned land in the sought-after Western Sydney region and will create more than 1800 jobs when completed. That will be done over five stages.
CBRE research shows only about 35 per cent of Australia’s supply pipeline is speculative development, compared to other markets, such as the US, where more than 50 per cent is speculative.
At just 0.2 per cent, Sydney had the lowest vacancy rate of any major city in the world, according to CBRE, followed closely by Perth on 0.4 per cent.
