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In Sydney, UniSuper and ISPT have acquired a 280-hectare greenfield logistics development site (Burra Park) in a 50-50 joint venture for $850 million. The property is adjacent to the entrance to the new Western Sydney International Airport.
UniSuper and ISPT intend to progressively develop the $3.9 billion Burra Park, with the first stages delivering a super-prime manufacturing, warehouse and logistics estate with more than 400,000 square metres of warehousing in the next seven years.
Ray White head of research Vanessa Rader said the expectation of interest rate cuts was driving confidence. “Industrial and its underlying supply issues, together with high occupancy, is compelling for many investors, especially when considering other asset types,” Rader said.
“Poor office occupancy is impacting returns … retail and its changing face, not to mention the alternatives and their uncertain track record, may result in investors circling back to industrial this year. Industrial was the major investment type in 2023 after historic office domination, a trend we expected to continue in 2024.”
On the rental side of the ledger, Knight Frank research and consulting partner Jennelle Wilson said rental growth would be slower in the first half of 2024.
Centuria Industrial REIT multi-unit Dandenong South development, Southside Industrial Estate, Melbourne
“After exceptionally high rental growth of 25 to 50 per cent over the past two years, the market has entered a stabilisation phase for rents,” Wilson said.
“Quarterly prime growth was under 2 per cent across all capital city markets in the fourth quarter, as the expected pause in rental growth eventuated.”
Knight Frank data showed that annual growth was led by Sydney at 16 per cent year on year, ahead of Brisbane at 15 per cent year on year and Melbourne at 8.8 per cent.
Incentives have remained mostly stable, with increases across selected Sydney and Melbourne precincts. Rental growth would remain subdued, Wilson said, “before prime rents are again drawn upwards by economic rents required to trigger additional development in the second half of the year.”
Fund manager Jesse Curtis from Australia’s largest listed industrial manager, Centuria Industrial REIT, said the fund’s main focus was infill sites close to high-density inner-city areas.
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That is where demand is high from internet shoppers wanting goods bought online and delivered to their homes rapidly.
“Domestic urban infill industrial market vacancy remains tight despite wider industrial market vacancy marginally increasing,” Curtis said.
“Tenant demand continues to be skewed towards infill markets as industrial users continue to prioritise proximity to a large population base.”
The fund is developing a 58,000-square-metre multi-level industrial facility in Wetherill Park, Sydney, and a 7500-square-metre site in Hallam, Melbourne.
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