Boutique property manager Centennial Property Group has acquired a multi-tenanted, industrial park in Melbourne’s inner west for $35 million on a 6.15 per cent yield.
Sydney-based fund manager Centennial Property Group, formed in 2012 by Jonathan Wolf and Lyle Hammerschlag, brokered the deal with Dawkins Occhiuto directors, Chris Jones, Andrew Dawkins and Walter Occhiuto.
The 7.27 hectare industrial asset, known as Brooklyn Distribution Park, was sold by Perth-based syndicator GM Property Group on sharp 6.15 per cent yield having bought the Geelong Road property for $19.6 million in 2015.
The 600-604 Geelong Road property, located 10 kilometres west of the central business district is close to the Westgate Freeway, the Western Ring Road and the port and is tenanted by Storage King, Avanti Bicycles, Crown & TTL Transport.
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Agents highlighted that the property offered a long list of fundamental investment credentials including the strategic inner western location on a key arterial road.
“Industrial property is increasingly on the radar of serious investors and any opportunities within key industrial markets are now the target of forensic examination as the competition for the best and highest yielding assets intensifies,” Dawkins Occhiuto director Chris Jones said.
“That competition has seen industrial yields tighten considerably over the last 12 months to what is now their lowest point in at least a decade.”
Centennial fought off expressions of interest from a wide range of local, interstate and off-shore buyers.
Unprecedented demand for large-scale industrial properties has continued to create “fever pitch” conditions in Melbourne’s west, considered one of the most active markets within this segment in Australia.
“We are going to see that tightening continue while industrial property offers such an attractive differentiation to alternative investments and also as the availability of prime investment stock dwindles,” Jones said.
While Melbourne's western industrial property market has reached a fever pitch, demand across Melbourne remains unabated with land prices continuing to rise for all sizes and locations.
Diminishing supply of quality land in strategic locations continues to put pressure on logistics companies’ notably for those looking for lots above 10,000 square metres.
According to Cushman and Wakefield’s latest Industrial MarketBeat, Melbourne currently has 21,000ha of industrial land and some 7,000ha in reserve.
Higher land prices are expected to combine with higher infrastructure costs to drive face rents higher by 2021.
Cushman also noted that existing industrial land banks, bought at lower prices, are close to being exhausted and are maintaining face rents at fairly stable levels.
Vacancy rates in the market are below 5 per cent and supply is being delivered in the form of speculative developments.