The joint venture has bought up four sheds on a 9.6ha site at Yatala, which it says has a “compelling risk return profile”.
US-backed PGIM Real Estate and KM Property Funds acquired the prime industrial and logistics estate south of Brisbane in an off-market deal for an undisclosed sum.
The property at 14 Dixon Street comprises four freestanding warehouses with a gross lettable area of 43,572sq m across a 9.6ha parcel of land.
This is the second time KM Property Fund has partnered with PGIM Real Estate in the past nine months, which the funds manager said indicated the strong appetite for high-quality industrial assets in Australia.
KM Property Funds partner Nick Crockett said the deal cemented their expansion as a “national industrial operating partner”.
“The compelling risk-return profile of the estate makes it an excellent asset to be added to our portfolio,” Crockett said.
PGIM Real Estate managing director Steve Bulloch said the Yatala precinct had good fundamentals.
“We like the prospects for this sub-market and the high quality, multi-tenanted asset,” Bulloch said.
“The partnership with KM Property Funds on this acquisition aligns with our thesis of targeting high quality assets with rental reversion potential that will be attractive to core capital investors in the future.”
The asset is leased with a weighted average lease expiry of 4.7 years, and passing income was well below market, which Bulloch said presented significant reversionary upside and a compelling acquisition opportunity.
KM Property Funds partner Ryan Korda said the group was investing in the micro-location of Yatala due to its proximity to Brisbane and the Gold Coast, which he said would “continue to capitalise on the diverse occupier pool and low vacancy rate”.
The acquisition is the latest in a spate of deals in the industrial market, which is showing signs of a resurgence, according to data from Savills.
The report reveals that investment volumes reached $3.5 billion at the end of 2024, a 52 per cent increase year on year, and the highest result since 2022.
Sydney remained an industrial investment hotspot, while Brisbane also demonstrated some robust growth.
Savills national head of research Katy Dean said Western Sydney’s net absorption rate and competitive leasing landscape was spurring developers to action.
“The fourth quarter signals an important turning point for industrial, with the sector’s strong finish to 2024 setting a positive tone for 2025,” Dean said.
“While some deal metrics are still to be finalised, the increased investment volume marks a significant recovery from the 2023 slowdown.”
Sydney West has recorded notable rental growth of 5.4 per cent quarter-on-quarter, becoming increasingly competitive as vacancy rates decline, while Adelaide North West posted a modest jump of 2.8 per cent quarter-on-quarter.
Melbourne West, Brisbane Southside and Perth Core markets have all seen little movement in rental values.
“Rising demand in Sydney and Brisbane is starting to influence market dynamics, with early signs of rental growth emerging in some of the smaller precincts within these markets,” Dean said.
“Markets with limited new supply and low vacancy rates are expected to outperform in the near term.”
