Leda Holdings has purchased a large infill industrial investment in North Rocks for $57 million, through Colliers’s Gavin Bishop, Sean Thomson, Paul McGlynn, and Matthew Flynn.
A private investor sold the 46,800m² site he had owned for 24 years, which has 19,187m² of improvements across three buildings, leased to five different tenants with a weighted average lease expiry (WALE) of 2.94 years, generating $2.4 million in rental income annually, and is located in one of the most tightly held industrial precincts in Sydney.
Leda and Colliers since the acquisition, have begun to reposition the business park asset by attracting new tenants to the property striking a new lease deal to increase the WALE.
Gavin Bishop, Head of Industrial Capital Markets, Australia, said “This site was strategically acquired given the significant investment in infrastructure that is planned or currently underway by the Government. Most of this investment is happening within Western Sydney.”
“North Rocks is regarded as one of the most tightly held industrial precincts in Western Sydney, offering excellent access to the M2 Motorway and the Parramatta CBD,”
“With the rapid growth in e-commerce, infill industrial markets such as North Rocks are becoming extremely popular with last mile logistics occupiers and investors given the access to major road infrastructure, existing precinct amenity and the access to surrounding blue collar workforce.”
Paul McGlynn, National Director at Colliers Western Sydney office, said “The business park provides opportunities for rental growth in the short term and has always been well received by tenants in the market place due to the central location and functional improvements. The significant land holding provides value add opportunities in the short to medium term with a range of development outcomes under consideration.
Sean Thomson, Director of Industrial Capital Markets at Colliers, said “Demand for industrial & logistics assets has surged domestically and globally as investors have looked to reweight or increase their weighting to the asset class on the back of the e-commerce boom, which accelerated during the pandemic”.
“An estimated $50 billion of unsatisfied domestic and institutional investor capital is seeking to find a home in Australia's booming industrial property market and expected to drive further yield compression across the market”.
The value of e-commerce has increased exponentially as a result of COVID-19 and the take-up of online retail has gained significant market share on brick-and-mortar retail sales as consumers are forced to buy online. Online retail growth of 55% was recorded in 2020 and compares to growth of 12% just prior to the pandemic. Long term, the structural and cultural shift to online retail is expected to persist as consumers become accustomed to the simplicity of online retail platforms.
Despite the rapid growth of e-commerce in Australia, it still represents only a fraction of total retail spending at ~10% and compares to 26% in the UK and 19% in the US. Colliers Research are forecasting online retail sales to grow to ~14% by 2023 which will result in warehouse demand of 1.8 million sqm between now and then.
The property was successfully transacted through utilising Colliers' dynamic relationships with key local, national, and international buyers.