This article is from the Australian Property Journal archive
CANADIAN giant Brookfield Asset Management is making its first move into Victoria’s logistics sector, having won approval for a $600 million estate as it goes about doubling its national industrial portfolio over the next 18 months.
Located at 60 and 130 Greenhills Road in Pakenham, in Melbourne’s south-east growth corridor, Cardinia Logistics Estate will provide more than 185,000 sqm of space over two sites.
The estate will comprise 32 warehouses with areas ranging from 1,500 sqm up to 20,000 sqm, targeting small and medium-sized businesses seeking scalable last-mile storage, warehousing and manufacturing facilities.
“While we have just received the Precinct Structure Plan approval, we are now actively in market and have some good active conversations underway with a number of prospective tenants,” Will Green, senior vice president, developments, Brookfield Properties told Australian Property Journal.
Brookfield Asset Management believes tenants will see value in the new estate.
“We like the Pakenham market because of the relative value it provides tenants given the rising occupational costs in nearby Dandenong and other markets,” Green said.
“It is also well accessed for road networks.”
Dandenong is the major industrial hub of Melbourne’s south-east and consistently records low vacancies. Urban Property Australia has the vacancy rate for the south-east pegged at just 1.5% at the end of September, and mid-year rents were growing at more than 27% annually. Pakenham is around a 30-minute drive further out from the CBD, but is still well connected to Melbourne via the Princes Freeway and Princes Highway.
Connectivity is likely to be enhanced by upcoming major infrastructure projects including Melbourne’s North-East Link, the Dandenong South Inland Port, the Monash Freeway Upgrade, and the Suburban Rail Loop.
“Pakenham remains tightly held and has experienced rapid growth on the back of major infrastructure projects, with scarce opportunity in infill markets like the cities of Monash, Dandenong, and Casey,” Green said.
He said development opportunities in Pakenham remain limited with most neighbouring land zoned for non-employment urban growth.
The estate’s first warehouses are expected to be available to occupy from late 2025, with leasing to be handled by Lachlan Ferguson and Ned Murphy from JLL and Gordon Code and James Stott from Colliers.
Brookfield expanded its Australian real estate portfolio into logistics in 2021 as part of a broader push into alternative sectors, and has grown its platform to $1.25 billion.
“Brookfield’s aspiration is to more than double the size of our portfolio during the next 18 months, including further potential growth in Victoria,” Green told Australian Property Journal.
Brookfield has just completed the 12.6-hectare Connect Central Sydney Logistics Estate in Villawood, which was jointly delivered by Brookfield Properties and Time & Place. Brookfield Properties has secured leasing commitments over the majority of the estate, with more than 90% leased or under advanced negotiation.
Tenants joining the Villawood estate include Kerry Logistics, Honest to Goodness, Scope Joinery, Ricky Richards, FJT Logistics, Seima and Euro Car Parts.
Last year, Brookfield and Centennial teamed up to launch the new $700 million industrial and logistics Enhanced Value Partnership fund, with a strategy to target niche, mid-sized or underperforming assets in urban markets with limited supply, that are often overlooked by institutional investors.
More south-east Melbourne estates
Investors, developers and fund managers have been steadily collecting large-scale sites throughout various points of Melbourne’s south-east this year for logistics estates.
Also in Pakenham, Pan-Asian logistics giant ESR recently partnered with Japanese giant Mitsubishi Estate Asia for the development a $175 million industrial estate.
In a circa $200 million deal Elanor Investors Group teamed up with PGIM Real Estate to acquire a 19-hectare site that is currently a Woolworths storage facility, which they will turn into a 113,000 sqm estate,
MAB Corporation, meanwhile, snapped up more than 32 hectares of former quarry land in Cranbourne East for more than $50 million.
Closer to the city, in Clayton South, MaxCap and Troon Group have received planning approval for a 60,000 sqm industrial estate with nine warehouses on a 10-hectare site the joint venture acquired last year for $50 million.
