Frasers Property Secure Leasing Deal for Speculative Build in West Sydney

Frasers Property have signed a leasing deal with TTI on its $45 million speculatively developed warehouse in Sydney’s Eastern Creek.

The five-year leasing deal, which takes in 15,900sq m, comes at a time speculative industrial construction is expected to hit a low in Sydney’s outer west, with limited supply forecast until the first quarter of 2021.

Frasers General Manager Ian Barter said “spec buildings” in Western Sydney have performed strongly recently.

“And we see this trend continuing as supply decreases as a result of the lack of development opportunities across the broader market,” Barter said.

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New CBRE research forecasts speculative industrial construction is expected to hit a “historic low” in the region.

“This presents a real window for developers to capitalise on the lack of supply and provide high quality projects that meet occupiers’ design requirements,” Industrial & Logistics Services CBRE Regional Director Cameron Grier said.

The average take-up of speculative buildings in the region has been around 110,000sq m per annum, Grier said.

CBRE’s data shows only 27,000sq m of approved projects are currently available for delivery this year.

“Analysis of lease deals over the past three years shows that developers had achieved an average 5 per cent premium on the face rental,” Grier said. “And needed to pay an average of 17 per cent less on incentives when signing deals in speculative projects, as opposed to pre-lease deals.”

CBRE expects low supply of speculative projects will “keep upward pressure on rents” and lead to a “further tightening of incentives” in Sydney's outer west.