Owners of industrial properties in the new Botany Bay LEP are reaping the benefits of significant planning changes as developers circle for higher density retail and residential opportunities.
According to CBRE Capital Markets Director Daniel O’Brien, developer demand is at its highest level in a decade.
One of the most recent sales involves 1144 & 1146 Botany Road, Botany which was recently marketed on behalf of hang glider manufacturer Moyes.
Mr O’Brien said half a dozen offers had been made for the site, which presently features a 1,600sqm industrial building on a site of 1,410sqm.
Icon Construction Group snapped up the property which is likely to accommodate a boutique development of around 18-20 units above ground floor retail space.
“As an industrial building the property was worth $2.5 million-$3 million, but the potential to redevelop the site under the new LEP pushed the sale price to $3.65 million,” Mr O’Brien said.
“Residential developers are being very bullish at present as they know that the end product, particularly in this style of boutique project, will virtually sell out on launch day.”
Other recent deals include the $11 million sale of 767 Botany Road, Rosebery. The new owner, Botany Road Project Pty Ltd, has lodged a development application to build 11,400sqm of retail space and 88 apartments.
“The site had no approval or income, and we still had multiple purchasers making offers,” Mr O’Brien said.
“The potential for change of uses, proximity to rail and the end price point is driving demand for mixed use sites in this market.”
The strength of retailer interest for available opportunities is also underpinning demand, Mr O’Brien said.
In the case of 767 Botany Road, the proposed retail area generated strong interest from a wide range of users, even ahead of the DA being lodged.
“The demand for retail space, especially food and liquor, is extremely competitive. The most competitive I can ever recall,” Mr O’Brien said.
“So while we have seen considerable pain over the past few years at the discretionary end of the market, in areas such as fashion retailing, the convenience end of the market and non-discretionary retailing has been very resilient. We’ve also seen the major supermarkets and liquor stores completely shift their focus when opening new stores or assessing new sites.”
While supermarket operators had traditionally focused only on sites which could accommodate a 4000sqm supermarket with 200 car parking spaces, retailers were now looking to pre-commit to new residential developments and had adapted to much smaller format stores.
“A decade ago this was really uncommon, but planning constraints and increased competition from the likes of IGA and Aldi, has meant that the major supermarket operators are being much more flexible with their requirements,” Mr O’Brien said.