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Approval of South Sydney Industrial Precinct to Alleviate High Demand For Industrial Sites

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South Sydney’s industrial property market continues to grow with the recent planning approval of a substantial 34,000 sq m mixed-use subdivision at 1901 Botany Road.

A joint venture between private equity group Monark Property Partners and the Horme Group the project is estimated to yield a gross realisation value in excess of $100 million.

The project is set to alleviate some of the high demand and low vacancy rates of industrial sites across Sydney’s southern suburbs which have fell to its lowest ever recorded rate in the final quarter of 2016, according to Knight Frank.

Upon completion, this newly approved site will contain several blocks under 2,000 sq m, designed to cater to the enormous overflow of creative start-ups (IT, media and retail sectors) relocating from city surrounds due to high rental premiums.

According to Michael Kark, Managing Director of Monark Property Partners, commercial and industrial precincts have become scarce in recent years due to the wide-spread rezoning of former industrial sites for residential use. This rezoning has created widespread upwards pressure on existing and future industrial sites and has fed the continuing industrial and commercial demand.

According to Kark, this evolving landscape has created an attractive marketplace for investors: “A recent report from Savills on the Key Australian Industrial Leasing Sales proves exactly the kind of demand the industry is experiencing nationwide."“There is currently 100 million square metres of industrial floor space in Australia, 40 million of which is owner-occupied, [and] another 10 million is under 2,000 square metres in size. This leaves 50 million square metres of leaseable space and of this, another 5 to 8 million falls to lease renewal each year.

In a string of approvals from City of Sydney, a number of South Sydney industrial sites have been rezoned for residential or mixed use and the lack of new industrial development in the area is feeding a severe undersupply.

“Rental prices for South Sydney industrial warehouses are the highest in the state, recording prices from $140 to $200 per square metre.” Kark said.

“With strong demand in the region and low vacancy rates, we have seen the market respond with multi-story industrial units to maximise floorspace ratios and market values, which is why this area is of interest to us.”

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According to Michael Kark commercial and industrial precincts have become scarce in recent years due to the wide-spread rezoning of former industrial sites for residential use.  Generic stock image copyright:

anan796 / 123RF Stock Photo
The industrial sub-division of the 3.4 hectare site in Matraville, South Sydney developed by Monark Property Partners and Horme Group plans to offer 14 lots of varying size to cater the much-in-need area.

“The prime location in South Sydney is an important industrial region with direct links to Sydney’s major transport gateways, Sydney Airport and Port Botany, and this new development will be no exception,” Kark said.

According to JLL’s Industrial Investment Review 2017 report, the country’s annual industrial sales volumes have grown consistently over the past nine years, with new records reached every year since 2014.

“Australia’s industrial sector achieved the highest investment activity in the Asia Pacific in 2016 and it’s on an upwards trend.” Kark said.

“These statistics are symptomatic of a nationwide issue and our site in Botany will offer relief to an area desperately in need.”

Achieving permit approval three months ahead of schedule, construction is now due to commence October 2017 with projected completion in early 2018.

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Article originally posted at: https://theurbandeveloper.com/articles/south-sydney-industrial-market-gets-boost-with-planning-approval-granted