Fund manager and office landlord Dexus will further its exposure to the booming industrial real estate sector after securing one of the last large development sites in western Sydney’s emerging industrial precinct Mamre Road.
The country’s biggest office landlord has purchased a vacant 30ha site at 113-153 Aldington Road in Kemps Creek for $123 million from private vendors.
Dexus head of industrial developments Chris Mackenzie said the site would allow Dexus to grow its industrial footprint and customer base in a “key market”.
“In a competitive market, we are focused on the locations that customers will value in the future,” Mackenzie said.
Dexus chief investment officer Ross Du Vernet said the industrial sector was now hyper-competitive and the company had been forced to rethink how it identified sites and secured opportunities.
“Having Chris Mackenzie lead the transaction effort during the past 12 months has enabled us to focus on the locations and built form that customers will value in the future,” Du Vernet said.
“It has also made it more efficient to identify development potential in assets and sites.
“This has seen us gain good momentum in a crowded market, with almost 90 per cent of transactions secured off-market during the past year.”
Dexus has transacted 18 properties and land banks with an on-completion value of circa $1 billion, and has a further four properties in exclusive due diligence.
“On completion of developments under way, the group’s industrial exposure will be close to $10 billion, so it’s a very significant part of our business,” Du Vernet said.
Its latest acquisition comprises three lots with the potential for Dexus to build up to 150,000sq m of industrial and logistics space.
Dexus has secured a pre-lease agreement with McPhee Distribution Services, which wants to consolidate its NSW operations, committing to 72,000 square metres.
The off-market deal was negotiated by Colliers’ David Hall, Fab Dalfonso, Phillip Bradac and Jock Tyson.
Hall said the Mamre Road Precinct was set to benefit from the NSW government’s commitment to $2.6 billion in funding to the future development of the area and to deliver key infrastructure.
“The significant 30ha property comprises three lots, delivering the opportunity for a strong development pipeline,” Hall said.
Colliers estimates that the current supply of appropriately zoned vacant industrial land in western Sydney will run out in about 4.8 years.
The precinct provides about 850ha of industrial land which could provide about 5200 construction jobs and 17,000 ongoing jobs when fully developed.
Frasers Property Industrial, alongside Sydney fund manager Altis Property Partners, has since broken ground on its on a 400,000sq m logistics estate at 649-763 Mamre Road which has an end value of more than $1 billion.
“Given the heightened shortage of industrial zoned land stock in western Sydney, this is a strategic purchase on behalf of Dexus,” Hall said.
In August, Dexus acquired the McPhee’s Super Core Logistics portfolio for $186 million.
The four properties comprise more than 70,000sq m of industrial space on an average lease expiry of 6.7 years.
Both the McPhee portfolio and Kemps Creek transactions are subject to put and call options, which if exercised are expected to settle between financial years 2022 and 2023.
On completion of the developments, these acquisitions combined will deliver $680 million of premium industrial assets into Dexus’ coffers.