Colliers’ Gavin Bishop, Sean Thomson and Fab Dalfonso assisted Australia’s largest listed pure-play industrial REIT, Centuria Industrial REIT (ASX: CIP), securing an off-market, high-quality industrial facility at 82-92 Rodeo Road, Gregory Hills for $70 million.
The sale of the 22,439m² logistics facility, situated within Sydney’s South-West growth corridor, demonstrates investor demand for super prime industrial investments.
Gavin Bishop, Head of Industrial Capital Markets, Australia, said, “This transaction represents the growing desire for private entities to sell their properties off-market, capitalising on the significant tailwinds within the industrial and logistics sector.”
“Demand for high-quality distribution centres continues to strengthen off the back of the continual rise of the digital economy. Secular trends fuelling modern logistics companies are requiring larger warehousing to cater to the more sophisticated needs of tenants.”
Sean Thomson, Director of Industrial Capital Markets Australia, affirmed, “The shift in investment allocations towards the industrial and logistics sector has added significant depth of capital to the market, which has driven yields to record lows. Nationally, prime industrial and logistics yields have compressed 110 basis points over the past 12 months, with prime yields along the eastern seaboard now averaging 3.85% within core markets as of Q3 2021.”
“The outlook for further compression is favourable, as the spread to the risk-free rate remains broadly in line with the long-term average. In addition, further yield compression in the sector would bring prime yields in Australia more in line with key global markets such as Hong Kong, London, and America where prime yields are closer to 3.5%.”
As of last month, Colliers also helped CIP transact the largest standalone asset within Australia this year for the $200.2 million super prime grade industrial facility at 56-88 Lisbon Street, Fairfield.
Colliers believes that to secure high-quality industrial assets within Sydney, prospective purchasers must be right in line with the current market parameters and factor in the strong market sentiment. There is a robust possibility that capitalisation rates for prime industrial facilities will hit sub 3.25% by the end of 2021.
Fab Dalfonso, National Director Industrial, added “The strong performance of the Sydney industrial and logistics market has continued throughout 2021 with significant momentum being recorded in the occupier markets.”
“Macro drivers for industrial and logistics tenancy demand, such as growth in e-commerce and infrastructure investment, continue to support leasing activity across the Sydney market, with approximately one million sqm in occupier requirements currently in the market.”
The Australian industrial and logistics sector has been the best performing commercial property sector over the past 12 months as strong fundamentals support elevated demand levels within both the occupier and investment markets.