This article is from the Australian Property Journal archive
DEXUS has supercharged its industrial development pipeline by snapping up three sites in Melbourne, Sydney and Brisbane for $188 million, which it plans to develop with a combined end value of circa $700 million.
The sites are:
- A 127ha land located at 11-167 Palm Springs Rd Ravenhall, Victoria (50% Dexus; 50% Dexus Wholesale Property Fund (DWPF). The five to seven-year project will have an end value of approximately $480 million.
- A 10ha brownfield opportunity at 54 Ferndell St South Granville, NSW (100% Dexus), a two-year project with an estimated end value of $140 million.
- And a 9ha site at 425-479 Freeman Rd Richlands, QLD (100% Dexus). The two to three-year project will have a circa end value of $90 million.
Chief investment officer Ross Du Vernet these sites replenish Dexus’ industrial pipeline in core locations as well as boost its funds management business.
“The planned developments on the sites, which align with our focus of activating the development pipeline, will be built out over the next five to seven years.
“Since 2010, we have developed and leased 39 industrial development projects across 730,000 sqm in Sydney, Melbourne and Brisbane,” he added.
The Ravenhall site is located in the core West Melbourne industrial precinct and is set to benefit in the medium to long term from its proximity to the proposed Western Intermodal Freight Terminal. Dexus plans to develop up to 380,000 sqm of prime commercial and industrial property on the site. Settlement is expected to occur across two tranches in December 2018 and August 2019.
The South Granville site is located within a tightly held industrial market with constrained land supply. Dexus plans to develop over 54,000 sqm of industrial property across four buildings with varying tenancy sizes. Settlement is expected to occur in September 2018.
Finally, the Richlands brownfield opportunity is located in close proximity to DWPF’s Drive Industrial Estate which completed in 2015 and is now fully leased. Dexus plans to develop a circa 52,000 sqm of industrial property with a flexible design to suit varying tenancy sizes.
These latest developments comes hot on the heels of Dexus’ May announcement it will redevelop the Lakes Business Park South, close to Sydney Airport, into a $200 million mixed-use precinct.
Dexus is tapping into the rise of demand for industrial space, which has resulted in values skyrocketing.
In Melbourne, where land is traditionally abundant, heightened competition and a lack of properties has seen industrial land prices jump by 100% in the past three years, according to Cushman & Wakefield.
In the West, where Dexus’ new $480 million project will be located, small blocks that traded for $190 per sqm three years ago, now sell for closer to $300 per sqm, whilst larger blocks that traded for $150 per sqm are now trading around $200 per sqm.
Cushman & Wakefield’s national director of research Tony Crabb said the price growth is attributable to a number of factors, including a need from developers to replenish their land banks for the next round of development demand driven by a strong economy.
Australian Property Journal
