Investors help drive demand for Western Sydney warehouses

In an excellent sign for the prospects of Western Sydney, commercial property firm Raine & Horne Commercial (Homebush) reports that institutional investors are bringing new buildings onto the market on a speculative basis with the view to producing quality assets and supplying the market demand.


“With the current trend for warehouses of this size continuing, A REITs in particular have been showing a keen interest in industrial warehouses to develop between 5,500 square metres and 20,000 square metres in key industrial locations across western Sydney, such as Eastern Creek, Greystanes and Erskine Park, where access to the Sydney Orbital network is available,” said Thomas Muller, director of Raine & Horne Commercial Homebush,


Mr Muller said supply of stock in this calibre demonstrates the continuing appetite for industrial investments in these existing industrial areas of western Sydney, which is also a consequence of the current levels of pre-lease competition.


“The charge is being led by Dexus Property Group and Australand, who have developed or have in planning primary warehouses over 20,000 square metres.


“These buildings are being produced purely on speculation, which provides the market with more options for this style of offering outside of pre-leases that are well catered for.


“As a result, owner-occupiers are being attracted by the potential to move from out-dated buildings into brand new premises,” he noted.


Higher internal warehouse clearances with increased cubic capacity and lower waiting times for completion as seen with pre-leases bring major appeal with Western Sydney industrial sites, while enhanced movement efficiencies for trucks both on the premises and onto major motorways are also attractive.


“In addition, the reduction in Western Sydney land prices compared to pre-GFC levels, as well as population growth in the south-west and north-west regions of Sydney ensures suppliers and users of industrial property are maintaining an interest in the region, driven through the logistics sector.”


In addition, Mr Muller said institutions with access to finance and seeking a way to grow are considering building industrial facilities the best way forward.


“Speculative building of prime industrial assets is in the sights of developers such as Dexus Property Group, Goodman and Australand. Dexus in particular has access to funding and are ready to move,” says Mr Muller.


“In turn, these developers are looking to lease warehouses to transport/logistics companies who have contracts to warehouse and transport goods from the major retail chains and importers.”

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