Coombes acquires maiden industrial asset
After investing in cinemas, offices, shops, residential and land, Coombes Property Group has acquired its first industrial asset, opposite Sydney Airport.
The older style business park on 7435 square metres at 2-4 Hale Street, on the north east corner of Foreshore Road, in Botany, is setting the group back $25.25 million.
With 11 tenancies, the price reflects a c3.5 per cent passing yield.
The fund manager and developer plans to hold the property as an investment following a makeover.
The deal comes six months since LOGOS, in a fund co-held with the Abu Dhabi Investment Authority, paid Qantas $802m for a portfolio of eight assets – a mix of investments and development sites – covering 13.8ha in the neighbouring suburb of Mascot.
Also late last year, A2B Australia struck an Alexandria land swap deal with Addenbrooke which would see the cab company own a new headquarters on part of it.
Colliers’ Tom Barnier and Jeremy Green said their Hale St deal comes on the back of record low vacancy rates and a stock shortage “particularly in Botany, Mascot and Alexandria”.
“The Sydney industrial vacancy rate now stands at 1.5pc while there are many individual precincts well below this level,’ according to the executives.
“Primarily due to the limited prime assets on the market, we have begun to see that the capital seeking industrial and commercial property has started to shift towards securing development land for investors, aiming to create their own purpose-built assets,” Mr Green added.
“This is exactly what we have seen in this deal and will continue to see in South Sydney as there is still so much unplaced capital to be invested” (story continues below).
Occupancy, supply shortage, rezoning: drivers affecting price growth
Mr Barnier said the lack of vacant sites – be it to rent or buy – coupled with the withdrawal and rezoning of industrial land in the area to alternative uses, has placed substantial pressure on the area’s existing commercial product.
The Hale St property was one of the area’s last large-scale sites, he added.
“This [sale] signifies the strength of the industrial property market and the buyer’s vision to capitalise on one of the most rapidly growing and highly coveted asset classes in the wake of the pandemic,” according to the executive.
“CPG had a vision to add value to this site over time, based on there being an extreme lack of industrial land, coupled with record low vacancy levels,” Mr Barnier said.
The deal comes a week since we reported Urban Logistics Co, a joint venture between BlackRock Real Estate Assets and NashCap, paid $120m for the 4.1 hectare Kirby Industrial Park at Rockdale – five kilometres west of Botany
According to Colliers Research, there is 27.2ha of vacant industrial zoned South Sydney land.
About 120ha has been rezoned for alternative use since 2012.
Subscribe to our newsletter at the bottom of this page.
