Sydney, 30 March 2014 – Build it and they will come appears to have been a successful mantra for industrial developers in Sydney’s west following a series of recent tenant commitments.
A new CBRE review highlights that larger tenants have shown a strong appetite for new build projects in prime industrial locations.
CBRE Director, Industrial & Logistics Services, Greg Pike said the likes of Goodman, DEXUS and Australand have all recently secured major lease commitments on development projects that had been undertaken purely on a speculative basis.
“These developments have been well received by larger tenants looking to relocate to new builds without having the time to commit to a purpose built facility,” Mr Pike said.
“The common denominator has been that all these projects are in prime industrial locations, close to major arterial road networks and built to a high standard.”
Fellow CBRE Industrial & Logistics Director Peter Blade said the run of activity had involved developments in Greystanes, Huntingwood, Eastern Creek and Erskine Park.
Recent deals include a distribution facility at 72 Huntingwood Drive; Huntingwood on which Goodman commenced construction in May 2013 buoyed by a 15,000sqm pre-lease that was secured with Linfox on a neighbouring site.
Mr Pike said Beaumont Tiles had leased the new 8,140sqm Goodman facility prior to practical completion in January this year. The freestanding corporate distribution facility includes high clearance warehouse space, corporate offices and amenities as well as dual street access, a mixture of recessed docks and on-grade roller doors.
The 10 year lease was struck at an initial rental of $117.50/sqm.
CBRE’s Mr Blade said DEXUS had enjoyed similar success at its 1 Basalt Road project in Greystanes.
Construction of four adjoining office / warehouse units began on a speculative basis in August 2013 following the success of a neighboring project at 3 Basalt Road. That project, which was a virtual mirror image, was fully leased shortly after practical completion.
In the case of 1 Basalt Road, Mr Blade said the complex would have a combined lettable area on completion of circa 19,480sqm, including high clearance warehouse space and an individual corporate office per unit.
Each unit will have multiple recessed docks, on-grade doors and is being constructed to a very high standard. The estate also benefits from excellent exposure to the new Reconciliation Link Road joining Wetherill Park directly to the M4 motorway at Prospect via the Greystanes industrial park.
Well ahead of practical completion, set down for April this year, Mr Blade said three of the four units, totaling 15,500sqm, had been leased in one line to marketing services company The Consortium Centre.
“There is just one remaining unit of 3,900sqm, which has received excellent interest and we are confident it will be leased prior to PC.”
Other beneficiaries of the tenant interest in speculatively developed stock include Australand. After securing Schenker to a 10-year lease on a 16,000sqm spec-built project in Eastern Creek, Australand recently gave the green light to a second, 16,500sqm project which is due for completion in late 2014.
Mr Pike said a lack of available existing stock was helping to drive the increase in speculative development.
“Institutional land holders are seeking to grow funds under management organically and are achieving higher rents for speculatively developed stock than by competing in the pre-lease market,” Mr Pike said.
“By undertaking a speculative project they can target tenants who have missed their window of opportunity to secure a prelease by having stock available or nearing completion.”
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