This article is from the Australian Property Journal archive
FUND manager and developer Centennial has extended its buying spree, snapping up a six-hectare infill site in Melbourne’s eastern suburbs for $44 million where it plans to deliver new industrial estate.
Centennial will add the 8 Dunlop Court site in Bayswater to its Enhanced Value Partnership (EVP) fund. The site currently has an older-style manufacturing and distribution facility totalling 26,300 sqm of gross lettable area.
It said it would deliver a new multi-tenanted “institutional-grade, mid-space industrial estate” of around 32,000 sqm when the current two tenants’ leases expire in 2027, to capitalise on the area’s low vacancy rates and acute shortage of new institutional grade stock.
Bayswater is currently experiencing vacancy rates of sub-1%, it said, and is set to benefit from around $38 billion of transport infrastructure upgrades currently underway including the Victorian government’s major $16bn North East Link.
Centennial’s head of property funds, David Cupit said the Bayswater purchase was in line with the fund’s strategy of acquiring core industrial and logistics properties in land constrained markets, close to major transport and infrastructure networks and population growth areas.
Chris Jones, Adrian Rowse and Charlie Holmes (Cushman & Wakefield) Ben Hegerty, Joel Scully and Jack Kelliher (JLL) managed the sale on behalf of a private vendor.
Nick Lidonnici, Centennial’s head of portfolio management said the company would transform the site into an institutional-grade asset targeting businesses requiring smaller tenancies.
“We will redevelop the site into a contemporary, mid-space industrial estate offering flexible designs and tenancy layouts ranging between ~1,600 to ~4,600 sqm, to appeal to a broader mix of smaller to medium sized businesses often starved of new, higher quality industrial stock.
“As an income producing asset for the next two years, the opportunity to purchase Bayswater was compelling as it allows the fund sufficient time to finalise designs and obtain development approvals.”
Cupit said limited available developable land and sites in the area had seen the eastern market benefit from significant rental growth and returns over the previous 12 months.
“These factors combined with above-trend population growth and continued e-commerce penetration will continue to place pressure on the rental market and we are extremely pleased to have acquired this site in the right location, at the right time.”
Multiple Melbourne sites have been recently acquired for redevelopment into logistics estates. Also yesterday, 888 Property Group announced it had picked up a 42-hectare site in the western suburb of Truganina for $100 million where it will deliver a new development. In Mulgrave, Elanor Investors Group teamed up with PGIM Real Estate in a $200 million deal to acquire a 19-hectare site home to a Woolworths storage facility that they will turn into a 113,000 sqm estate, while ESR has recently partnered with Japanese giant Mitsubishi Estate Asia to develop a $175 million industrial estate in Pakenham, and MAB Corporation snapped up more than 32 hectares of former quarry land in Cranbourne East.
Centennial run continues
Centennial alone has now purchased four industrial sites in Queensland and Victoria worth in excess of $112 million in just four months, and the company expects to add at least three more assets to its portfolio before the end of the year.
Among the acquisitions are a 5.6-hectare industrial and logistics site anchored by Harvey Norman and Barwon Motors in Brisbane’s bayside suburb of Cleveland, bought for $31.2 million after an oversubscribed capital raising.
Early in the year, Centennial and Parkstone Funds Management acquired Bundaberg’s largest shopping centre for $107 million from the Queensland government’s investment arm, QIC.
