ESR Chief Calls for Better Planning for Industrial Land

There needs to be better planning and more co-ordination by the New South Wales government over industrial land package releases, real asset manager ESR’s Australian chief has warned.

Chief executive Phil Pearce said there needed to be more forethought and a better understanding of what was required to bring industrial land online.

Pearce was referring to the Kemps Creek and Badgerys Creek industrial packages—both part of the 850-ha Mamre Road Precinct, about 40km west of Sydney and rezoned for industrial use in June of 2020.

When fully developed it’s expected to accommodate up to 5200 construction jobs and ongoing employment for 17,000.

“Kemps Creek and Badgerys Creek were actually rezoned during Covid, and that’s a good thing,” Pearce said.

“The problem was, or is, that the infrastructure is not ready.

“That’s not necessarily the planning authority’s fault … it’s the various departments that have to feed into that. But only the land was rezoned, there wasn't funding and solutions in place for the infrastructure.

“So really, that land that was put online hasn't alleviated the shortage of supply because it's not adequately activated yet.”

▲ Solar Bay's James Doyle and ESR's Phil Pearce. The two companies will invest around $500 million putting solar panels on ESR warehouse roofs in the next 10 years.

Pearse was speaking to The Urban Developer after announcing a $500-million deal which will see hundreds of thousands of square metres of industrial rooftop space turned into solar farms.

ESR and energy owner and operator Solar Bay have teamed up to install 125,000 solar panels over the next 10 years, generating up to 50MW of power and potentially halving their tenants’ energy bills.

The partners have formed a new company that will rent ESR’s industrial roof space, install solar panels and sell the energy generated back to warehouse occupiers.  Battery storage is expected to provide 300MW hours.

In the first instance, Solar Bay will provide about 90 per cent of the capital, as well as expertise in technologies such as embedded networks, rooftop solar, electric vehicle charging, battery storage, and other renewable energy solutions.

However, Pearce said, as the program ramped up, ESR would increase its investment to up to 50 per cent.

“These assets are going to generate a return for us, and we have a number of investors that have an interest in investing in renewable energy,” he said.  “So what we're looking at doing is giving our investors the opportunity to invest alongside us and alongside Solar Bay.”

▲ Sydney’s tight industrial market has forced ESR to find other locations. This warehouse development is planned for Milperra, south-west of Sydney, near Bankstown Airport.

About 85 per cent of ESR’s 410ha of existing property and a 230-ha development pipeline is given over to industrial and logistics facilities.

Most recently ESR picked up a prime 4.8-ha industrial site site in tightly-held Botany Bay, 10km south of central Sydney, paying $143 million for the current Australian home of global industrial resin manufacturer Allnex.

“South Sydney is one area that is clearly land-constrained because you've got the CBD to the north, you’ve got the coast and then you’ve got residential in between,” he said.

“So as a result, industrial’s getting squeezed in the traditional South Sydney market, and that’s a problem.”

That squeeze has forced ESR to look at other locations, more towards the south-west.

In February last year ESR paid $112.1 million for 7.71ha in Milperra, about 25km from Sydney.

The developer is now looking for approval to build a two-storey warehouse or distribution centre with 12 tenancies on the site, which near both Bankstown Airport and the M5 motorway.