Diversified property heavyweight Dexus has secured a 10-hectare infill site for $61.5 million in Sydney’s booming industrial west.
The 54-68 Ferndell Street South Granville land grab is the largest 100 per cent freehold land deal in Western Sydney this year.
ASX-listed Dexus, which delivered a solid $1.73 billion net profit after tax this year, plan to develop the South Granville site to include up to 56,000sq m of industrial space for a variety of groups likely to include the burgeoning e-commerce sector.
The latest Knight Frank report reveals industrial vacancy in Sydney remains well below the historical average due to lack of existing lease options driving the pre-commitment market.
Positive economic conditions combined with government funded infrastructure projects have underpinned sustained demand for industrial property in Sydney, explains Knight Frank’s Matthew Lee.
“We are experiencing strong levels of consumer confidence, and with investors and developers potentially priced out of core commercial assets, the industrial market is an attractive investment opportunity.”
There has been a surge in speculative stock over the first half of 2018 with over 150,000sq m either completed or currently under construction – more than double than the first half of 2017.Knight Frank’s Head of Research & Consulting Ben Burston
Looking to capitalise on the rise in retail spending, Lee said major retailers are embracing the "bricks and clicks" business model, ultimately increasing the demand for distribution centres.
Savills Australia’s Darren Curry and Ray Trimboli brokered the South Granville deal, which received seven offers, on behalf of a private vendor.
Trimboli has sold more than $150 million worth of land since April, including Boral’s Greystanes sale to ISPT for $60 million and a $30 million Oakdale sale to Direct Freight Express, which Trimboli attributes to the strength of Western Sydney’s industrial development market.
“We expect the industrial land sales market to continue to perform highly in Sydney, as supply and demand forces are creating healthy competition among purchasers.
“Both owner-occupiers and developers are wishing to acquire zoned, serviced and well-positioned land within close proximity of major existing and under-construction infrastructure projects.”
Over the 12 months to July 2018, industrial land values across Sydney increased 22.9 per cent according to Knight Frank’s Industrial Market Overview.
Total vacancy as of July was 392,850sq m, with prime stock accounting for 82 per cent of available space.