ASX-listed Centuria Industrial REIT is paying $22.8 million for a North Geelong distribution centre rented to Quiksilver, a surfwear brand acquired early last year by California’s Boardriders Inc.
The off-market deal for 75-105 Corio Quay Road was negotiated by Fitzroys director Paul Burns.
On a 3.8 hectare parcel, the 21,772 square metre facility acts as Quiksilver’s logistics centre for the Asia Pacific region.
“The site comprises two modern, high-clearance industrial warehouse and office buildings connected by a fully enclosed transit area,” Mr Burns said.
The southern warehouse, built c2010, has a 12.2 metre clearance.
In 2018, Quiksilver signed a five year lease agreement with renewal options.
Based on the annual rent Quiksilver pays ($1,876,290), Centuria is picking up the asset on an 8.2 per cent passing yield.
Centuria’s purchase decision was made on the back of the property being chosen for the consolidation of the distribution centres of Quicksilver and the newly acquired Billabong business, Mr Burns said.
“Quiksilver had made a significant commitment to the property and the Surf Coast area, where they have been for many years,” the broker said, adding the company “recently made further upgrades to accommodate business expansion that include additional warehouse racking, office refurbishment and refitting, and increased staff amenities.
The consolidated Quicksilver and Billabong centre will see turnover at the facility go from around 4.5 million units to c10 million units once in full operation in the coming months.
The onsite workforce is expected to increase by around 30 full-time and 50 part-time positions, Mr Burns added.
Founded 50 years in Torquay, Quiksilver sold to Boardriders Inc, a surf brand owned by New York-based Oaktree Capital Management.
Billabong, Roxy and DC Shoes are now amongst Quiksilver’s sister-brands.
Last September, we reported, exclusively, that IP Generation, controlled by former Impact Investment Group executive Chris Lock, paid more than $15 million for an office/warehouse and showroom on a two hectare site in Torquay, about 22 kilometres south of Geelong.
Quiksilver will vacate the Torquay property at 27 Baines Crescent (pictured, above) as part Boardriders Inc’s plan to relocate its Australian headquarters to Burleigh Heads on Queensland’s Gold Coast.
In May, we reported that Boadriders Inc sold this Burleigh Heads office (pictured, below) to Singapore’s AIMS AMP Capital Industrial REIT for $38.5 million with a 12-year leaseback.
Retailers and investors backing Geelong industrial
“Growth in online shopping and demand for more efficient delivery and a bigger range of products across the retail industry has increased requirements for logistics systems and facilities,” Mr Burns said, of the North Geelong deal.
“Industrial real estate is now among the most sought-after investment classes, and land values are expected to rise further in the coming years.”
Mr Burns said there is heightened investor demand for strategically located logistics assets with quality fit-outs and strong lease covenants.
Coincidentally, the broker negotiated the last sale of the property in late 2016.
“Then, the facility was part of a package that included an adjoining 1.2-hectare development parcel of land – not included in the latest deal – which sold together for $19.5 million,” Mr Burns said.
“A-REITs have substantially increased their share of transaction volumes, with a number of listed and unlisted funds now undertaking portfolio re-positioning programs to increase their exposure to the logistics and industrial sector”.
Last year, the owners of furniture retailer Schots Home Emporium, who are currently selling a prominent Clifton Hill outlet, relocated the business’ warehousing functions to a new showroom at 22 Corio Quay Road.
Major players still keen on Geelong
Mr Burns said Centuria was attracted to the North Geelong property’s quality and location, near major transport infrastructure.
“The property is directly opposite Geelong Port, which saw record throughput volumes over 2018/19 that are expected to surge from 12 million tonnes to 32 million tonnes by 2048.
“It is also within 15 minutes of Avalon Airport and less than one hour from both Melbourne Airport and Port of Melbourne”.
Last January, Centuria Capital Group paid $115.25 million for a modern office at 60 Brougham Street, Geelong, leased to Victorian government entity, Transport Accident Commission.
Geelong is Australia’s second fastest growing city, according to Mr Burns.
“The National Faster Rail Agency has just been established following the federal government’s $2 billion commitment to a high-speed rail network between Melbourne and Geelong that would cut travel times to just 32 minutes,” Mr Burns said.
“Geelong is also welcoming major investments in manufacturing and industry, including the $100 million expansion of Carbon Revolution’s Waurn Ponds facility…and construction of new wind turbines at Berrybank and Dundonnell”.
As we reported in May, Pelligra Group plans to retrofit former Ford manufacturing plants in Geelong’s Norlane (image, below) into high-end industrial and business parks (Pelligra has the same plan for Ford’s redundant ‘Broadmeadows’ plant, which is actually in Campbellfield).
In January we reported that Melbourne builder Leaf Corp paid $10.6 million to Wesfarmers for Target’s long-time North Geelong headquarters on a 3.8 hectare holding at 12-14 Thompson Road.
Last week, we reported that ISPT paid Australian Unity a price speculated to be more than $140 million for a half-share of the Waurn Ponds Shopping Centre, about seven kilometres south-west of the Geelong city centre.
This deal includes 7.6 hectares of land available for residential redevelopment.