ESR Australia has secured one of the few remaining large-scale industrial sites in South Sydney, which has the potential to support a multi-storey logistics facility. The acquisition takes the ESR development pipeline in Australia to A$7.9 billion at a time when demand for logistics property has never been higher. 

ESR Australia has settled on the 48,000 sqm site for A$143 million, which is currently home to global leader in industrial coating resins, Allnex. 

In line with its strategy, EADP II will re-develop the asset into a core logistics estate, and ESR Australia intends to invest a further A$300 million to deliver c.58,000 sqm of GFA. The property has planning controls with no floor space ratio (FSR) or height limits, providing a significant opportunity to develop multi-level warehousing on the site.

Under the terms of the acquisition, Allnex has entered a five-year leaseback which will provide sufficient time for them to ensure alternative sourcing routes are established in close alignment with its customers and ESR time to obtain all necessary planning approvals. 

ESR Australia CEO, Phil Pearce, said, "ESR Australia is pleased to secure an infill site of this scale in the highly sought after Botany Bay Precinct. The strong demand for space within the precinct and site's planning overlay will enable us to explore multi-level warehousing on the site.' 

Allnex VP of Commercial Southeast Asia, Australia, and New Zealand, Zel Medak, expressed that the decision to sell the Botany Bay property followed a strategic review of its regional operations. 

Mr Medak expressed, "Allnex recognises the shifts within the Australian surface coatings market, both geographically and technologically, and is proactively taking measures to ensure the continuity of our operations. We are pleased to reach an agreement with ESR to ensure minimal disruption and to continue to provide our customers with high-quality and innovative products." 

South Sydney is one of Sydney's best-located precincts, with proximity to Port Botany, Sydney Kingsford Smith Airport, and major arterial road networks. Sydney has an extremely low vacancy rate sitting at 0.2%, while prime rental rates have grown 37.2% over the last 12 months and are forecasted to rise another 15% during 2023.