ESR Picks Up Prime Botany Bay Industrial Site for $143m

ESR Australia, the Asia-Pacific’s biggest real asset manager, has acquired a prime 4.8-ha industrial site in tightly-held Botany Bay.

ESR paid $143 million for the current Australian home of global industrial resin manufacturer Allnex—10km south of central Sydney—via its develop-to-core logistics fund ESR Australia Development Partnership II, or EADPII.

After offloading one of the few remaining large-scale industrial landholdings in the area, Allnex will now enter a five-year leaseback agreement with ESR.

For its part, ESR plans to invest a further $300 million on the site at 49 Stephen Road, Banksmeadow, developing a two-level facility with a gross floor area of about 58,000sq metres.

Planning controls for the site mandate no maximum floor space ratio or height limits, allowing for the development of a multi-storey facility—a trend gathering pace in land-locked Sydney.

Chronic undersupply has ratcheted down Australia’s industrial vacancy rate to record lows, with Sydney recording a rate of just 0.5 per cent—reportedly the worst in the world.

ESR Australia chief executive Phil Pearce said he was pleased to secure an infill site in the highly-sought-after Botany Bay precinct.

“The strong demand for space within the precinct and site's planning overlay will enable us to explore multi-level warehousing on the site,” he said.

▲ Allnex, which sold one of the few remaining large-scale industrial landholdings in the area, will now enter a five-year leaseback agreement with ESR.

Allnex vice president of commercial for the region Zel Medak said the decision to sell the Botany Bay property followed a strategic review of its regional operations.

“Allnex recognises the shifts within the Australian surface coatings market, both geographically and technologically, and is proactively taking measures to ensure the continuity of our operations,” he said.

With its proximity to Port Botany, Kingsford Smith Airport, and a major arterial road network South Sydney remains one of the capital’s prime industrial and logistics precincts.

Colliers International, which brokered the deal, said the acquisition allowed ESR to get a foothold into Botany Bay industrial market.

“This key transaction in the market showcases the evolution and bright future of multi-level logistics, particularly within South Sydney,” national director Trent Gallagher said.

Michael Crombie said it was rare to see such a strategic parcel of industrial land within South Sydney.

"The market’s strong response was testament to the scarcity of the asset,” the national director said.

“Given the investment yield for five years and continuing rental growth, it’s clear this purchase will undoubtedly prove to be a fantastic long term move for ESR.” 

The Botany Bay acquisition taking ESR’s development pipeline in Australia to $7.9 billion.

ESR announced in October last year it had raised $540 million for the new EADP II fund, with a targeted size of around $1 billion.  GIC, the Singapore government’s sovereign wealth fund, became the cornerstone investor with $490 million.