Wine Warehouse Value Grows 160pc as Logistics Boom

The Jreissati family has banked a cool $50 million for its Port Melbourne industrial asset after selling the property in an off-market expressions-of-interest campaign to a German investment group.

The family paid $31 million for 262 Lorimer Street in 2014—it transacted this month for $81.6 million at a sub-4 per cent yield (3.6 per cent), a 160 per cent increase in value over seven years.

Rathbone Wine Group, owners of Yering Station Winery in the Yarra Valley and Xandadu Wines in Western Australia, will continue to run its headquarters from the temperature-controlled warehouse and office after signing a 13-year lease with a fixed annual rental growth of 2.75 per cent.

Dawkins Occhutio director Chris Jones, who brokered the off-market sale to Institutional Investment Group, said it was the strongest price in industrial assets in Victoria avid was unheard of”.

“We expect continued occupier demand will continue to deliver strong and sustained rental growth over the medium to longer term as yields bottom out and the supply of more affordable land is exhausted,” Jones said.

Jones forecasted a continued yield compression at the lower end of the range in the immediate future, while limited investment opportunities would maintain downward pressure on yields into the future.

Another German investment fund moved in on South Australia’s industrial and logistics market earlier this year to spend $98 million on Treasury Wine’s warehouse facility at Penfield.

It was billed as the biggest industrial transaction of the year for South Australia at a market yield of 5.1 per cent.

The 1.69ha site at Lorimer Street overlooks the Yarra River and comprises a 15,246sq m building, a four-level office, a cafe and multi-storey car park.

Jones said there had been multiple bidders for the property, which has a good long-term tenant in place, prime location and transport and port access, within the Fishermans Bend precinct.

JLL’s head of industrial for Victoria Matt Ellis said the occupier market for industrial space was very competitive, particularly in Melbourne's west.

“Most occupiers in the Melbourne market are in continuous competition for space, with several groups often working through negotiations for any available assets simultaneously,” Ellis said.

“Despite the increasingly tight availability of existing space, we are still seeing significant deal flow across the market.”