ESR Australia has secured a large-scale industrial site in South Sydney, which presents an opportunity for the development of a multi-storey logistics facility.
This acquisition further strengthens ESR Australia’s development pipeline in the country, now valued at $7.9 billion, coinciding with a period of unprecedented demand for logistics properties.
The 48,000 square meter site, currently occupied by Allnex, a global leader in industrial coating resins, was acquired by ESR Australia for $143 million.
As part of their strategic approach, ESR Australia’s EADP II will transform the property into a core logistics estate, with plans to invest an additional $300 million to deliver approximately 58,000 square meters of gross floor area (GFA).
Notably, the site benefits from favorable planning controls, including no floor space ratio (FSR) or height limits, presenting a significant opportunity for the development of multi-level warehousing.
To ensure a smooth transition, Allnex has entered into a five-year leaseback agreement, allowing them ample time to establish alternative sourcing routes in alignment with their customers. Simultaneously, this provides ESR Australia the necessary timeframe to obtain all the required planning approvals for the project.
“ESR Australia is pleased to secure an infill site of this scale in the highly sought after Botany Bay Precinct,” ESR Australia CEO Phil Pearce said.
“The strong demand for space within the precinct and site’s planning overlay will enable us to explore multi-level warehousing on the site.”
Sdney’s industrial vacancy rate is the tightest in the country, with a mere 43,759 square meters of space available with quarterly rental growth sitting at 8.2 per cent.
The move comes after Charter Hall Group commenced construction on its first multi-level warehouse, known as Ascent Logistics Centre (“Ascent on Bourke”) in Alexandria, Sydney.
The development will unlock nearly 27,000 square metres (sqm) of logistics space across two levels, including 5,000sqm of A-grade office and wellbeing amenity, adding an additional modern long WALE logistics facility to the $2.5 billion Charter Hall-managed CLP portfolio.
Likewise, Goodman Group are looking at going up, with plans for its first multi-storey warehouse in Australia through a $700 million investment at two inner-city Sydney sites.