Centuria Industrial REIT (CIP) has purchased a Dandenong South business park on a funds-through basis.
The $88.8 million project (impression, top) will replace high-profile, neighbouring sites – the 4.1 hectare Dandenong Car Wreckers at 95 South Gippsland Highway, and the four ha Foresight training centre, next door (#105).
Cadence Property Group was the vendor; it will now deliver the project with Texco Constructions.
The 40,380 square metre estate is due for practical completion in FY22.
It increases CIP’s national portfolio to 63 properties worth $2.7 billion.
Just 2.5 years of supply, controlled by four players: Colliers
SouthSide Industrial Estate will include six warehouses, between 3395-13,610 sqm, and targeted to have a five star Green Star rating.
It would be the landlord’s seventh asset in the pocket – Melbourne’s most valuable for this kind of stock, outside of the inner-city.
The region’s industrial vacancy rate is about one per cent.
It is also fast approaching being fully developed; Colliers’ James Stott, who in January sold 75 South Gippsland Hwy, saying there is just 140ha of corporate owned and controlled land remaining in the core South East sector.
“From a take-up perspective, absorption levels have measured approximately 60ha per annum in recent years within the South East and as a result, this represents just 2.5 years of industrial land remaining within the market,” he added.
“With regards to the 140ha..90pc is controlled by four developers in Frasers, Salta, Pellicano and Goodman which are now only offering leasehold opportunities to the market (story continues below).
“In turn, this has created significant supply constraints for developers and occupiers looking for land in that market”.
Further value for our unitholders: CIP
CIP fund manager Jesse Curtis added “this Dandenong South acquisition is a rare opportunity to secure a high-quality, sustainable asset in a market affected by a scarcity of investment-grade industrial properties”.
The asset “builds CIP’s value-add pipeline and delivers brand new industrial products to the portfolio creating further value for unitholders,” according to the executive.
“The site is set to benefit from the newly announced Dandenong South Inland Port, enabling direct containerised freight from the Port of Melbourne, which is expected to aid in leasing demand”.
Last year, CIP doubled the lettable area of its Townsville Regional Distribution Centre – resulting in the sole tenant, Woolworths Group, extending its lease from seven years to 12.
“The REIT also repositioned and refurbished its industrial facility at 46 Gosford St, Hemmant [near Brisbane Airport], increasing occupancy to 95pc and delivering a 51pc valuation uplift”, Mr Curtis said.
“Currently CIP is…constructing a 10,244 sqm industrial facility in Bundamba [in outer south west Brisbane], which is due for completion in coming months,” he added.
Like that development, the Dandenong South project aims to achieve a Green Building Council of Australia Design and as Built Five Star Green Star rating – sustainability features including solar panels, recycled building materials and native vegetation.
“Investment grade industrial assets within the eastern seaboard, particularly within infill markets are in short supply given the demand from e-commerce users,” according to Mr Curtis.
“CIP has strong leasing and value-add expertise to leverage these trends to deliver high quality assets in well located industrial markets”.