This article is from the Australian Property Journal archive
ELANOR Investors Group has teamed up with PGIM Real Estate in one of the largest industrial sector deals of 2024.
The 19-hectare site, at 522-550 Wellington Road in Melbourne’s south-east suburb of Mulgrave, is currently home to a 68,000 sqm Woolworths storage facility that will close down on expiry of the supermarket giant’s lease in 2026, which the joint venture partners will plans to develop a 113,000 sqm estate.
Co-head of industrial and logistics at Elanor, Amneet Dari said the site offers “unprecedented access to the Monash Freeway and the broader motorway arterial network of Melbourne”.
“When it comes to last-mile logistics, this site is probably one of the best in the country,” he told Australian Property Journal.
The deal is believed to have come in at circa $200 million, making it one of the biggest industrial sector deals this year to date.
“The Melbourne industrial market we feel is quite strong – it’s been performing probably the strongest in the country from a leasing perspective in the past couple of years and we certainly feel that it’s going to continue into the future, given the land supply constraints,” Dari said.
“If you have a look at Mulgrave and the industrial supply that’s been coming online in that particular precinct, there has been zero brand-new development product for some time – the facility on this site we’ve acquired was built back in the 1970s.
“It’s almost the equivalent of buying in Botany in South Sydney and those sorts of strategic precincts, where you just don’t get the opportunity every day to pick up such a sizeable land parcel.”
Around 35% of Melbourne’s population is within a 30-minute drive time from the site.
Dari also noted the tailwinds driving the industrial sector, including e-commerce – which he said had stabilised, but overseas precedents suggest the long-term trend is that penetration will continue to increase – and population growth.
“We’re strong believers in the real estate and strong believers in industrial sector growth going forward”.
Elanor said its growing industrial and logistics platform is experiencing “significant demand” from wholesale and institutional investors
PGIM Real Estate is the US$206 billion real estate investment and financing business of PGIM. It made its investment on behalf of its Asia Pacific real estate strategy.
“The structural trends of e-commerce penetration and favourable long-term population growth outlook in Australia are making a strong investment case for the logistics sector. We think this investment presents a compelling opportunity with strong rental growth prospects,” said PGIM Real Estate head of transactions in Australia, Greg Linklater.
Managing director and head of Australia for PGIM Real Estate, Steve Bulloch said, “We feel that 2024 could prove to be a good opportunity to access some very good real estate”.
“We have made six strategic investments so far this year in Australia with a strong emphasis on the logistics and living sectors.”
PGIM last month partnered with KordaMentha’s KM Property Funds to acquire a Visy distribution centre in Melbourne’s western suburb of Laverton North for $92 million.