Dexus Industria REIT (Industria) has today announced it has agreed to acquire a 50% interest in 12 Church Street, Moorebank, NSW. The property will be acquired in joint venture with Dexus (Industria 50%; Dexus 50%), and Industria’s share of the acquisition costs, including stamp duty, will be approximately $22 million.

The acquisition incorporates a development opportunity, which is anticipated to complete in mid-2024, and will deliver approximately 34,000 square metres of multi-level warehousing across 15 to 20 units. Industria’s share of the development costs is approximately $40 million.

Moorebank is a major last mile logistics hub located within the local government area that is ranked the 4th highest for online buying (by volume) in Australia.There is also a limited supply of premium small units for last mile users, including third party logistics operators and direct retailers. All these characteristics underpin the expected strong demand for the development.

Industria Fund Manager, Alex Abell, said: “This is a unique development opportunity located in a highly sought- after last mile industrial location. We expect this acquisition will deliver attractive returns and drive future growth consistent with Industria’s strategy that was outlined in the fund’s recent market equity raising announcements.

“The acquisition builds on recent momentum following the agreement to acquire $598 million of assets in September 2021, as we continue to leverage Dexus’s fully integrated platform to access deal flow, and benefit from its in-house development expertise and established customer relationships.”

The acquisition will be funded by existing debt capacity and, on completion of the transaction, assets with development exposure is projected to increase from 6% to 8% of Industria’s portfolio. There is no change to FY22 FFO and distribution guidance.

The off-market deal was managed by Colliers’ agents Fab Dalfonso and Rino Gazzera.

“The sale of 12 Church Street in Moorebank represents an off-market transaction of an unused facility that was burnt down in 2020,” Fab Dalfonso explains. “Our vendor saw an opportunity to take advantage of the bullish market, demand for available industrial land in Sydney is significant.”

“Institutions are now considering smaller parcels under 4 hectares, due to land constraints leading to lack of supply and high demand,” Mr Dalfonso says. “With land rates under pressure in the South West Growth Corridor of Sydney, future concepts will most likely incorporate two-storey warehousing facilities to compensate for land values.”

Current warehouse demand is exceeding supply and has pushed South Western Sydney vacancy rates under 4.3%, this combined with land shortages across Sydney, is likely to see multistorey warehousing shape the next phase of industrial property. Luke Crawford, Director of Industrial Research for Colliers, recently launched a whitepaper ‘Multi-Storey Warehousing in Australia’
“Multi-level warehouses have existed in the Asia Pacific region for decades, particularly in the more developed markets of Japan, South Korea, Singapore, and Hong Kong, where dense populations and limited land availability have made them a necessity. With land supply continuing to diminish in the Sydney basin, multistorey warehouses will be the new normal,” Mr Crawford says.

Settlement of the transaction is anticipated to occur on or around 25 October 2021.

To request a sales analysis please contact the selling agents Colliers’ Fab Dalfonso and Rino Gazerra via the below contact details. 

Information in this article was authorised by Chantal Churchill, Company Secretary of Dexus Asset Management Limited and Industria Company No. 1 Limited

For Industrial Research enquiries please contact Luke Crawford, Director of Industrial Research for Colliers via the below contact form.