Centennial is continuing its busy spring buying spree snapping up a rare 6ha industrial infill site at Bayswater, 27km east of Melbourne's CBD for $44m.

The national fund manager and developer acquired the prominent site at 8 Dunlop Court from a private vendor in a deal negotiated by agents Cushman & Wakefield and JLL. Centennial will add the asset to its Enhanced Value Partnership (EVP) fund.

The acquisition enables the EVP to strategically develop the site, currently containing an older style manufacturing / distribution facility totalling ~26,300sq m of gross lettable area, into a new institutional grade, mid-space industrial estate located within a strongly performing market. 

Bayswater is currently experiencing record low vacancy rates at around sub-1 per cent and is also set to benefit from around $38bn of transport infrastructure upgrades currently underway including the Victorian government’s major $16bn North East Link cross city orbital road network due for completion in 2027.   

Centennial's Head of Property Funds, David Cupit said the Bayswater purchase was in line with the fund's strategy of acquiring core industrial and logistics properties in land constrained markets, close to major transport and infrastructure networks and population growth areas.  

"Cushman & Wakefield research shows the eastern industrial precinct remains the most tightly held in the Melbourne market with sub-1 per cent vacancy, and limited redevelopment opportunities of scale available," Mr Cupit said.

Centennial plans to redevelop the site into a ~32,000sq m multi-tenanted industrial estate when the current two tenants' leases expire in 2027 to capitalise on the area's low vacancy rates and acute shortage of new institutional grade stock. 

Nick Lidonnici, Head of Portfolio Management said the company was looking forward to transforming the site into an institutional-grade asset targeting businesses requiring smaller tenancies.   

"We will redevelop the site into a contemporary, mid-space industrial estate offering flexible designs and tenancy layouts ranging between ~1,600 to ~4,600sq m, to appeal to a broader mix of smaller to medium sized businesses often starved of new, higher quality industrial stock.      

"As an income producing asset for the next 2 years, the opportunity to purchase Bayswater was compelling as it allows the fund sufficient time to finalise designs and obtain development approvals."  

Mr Cupit went on to say: "With limited available developable land and sites in the area, the eastern market has benefited from significant rental growth and returns over the previous 12 months. 

"These factors combined with above-trend population growth and continued e-commerce penetration will continue to place pressure on the rental market and we are extremely pleased to have acquired this site in the right location, at the right time."  

This month's purchase of the Bayswater asset caps off a busy period for Centennial which has purchased four prime industrial sites in Queensland and Victoria worth in excess of $112m in just four months. The company expects to add at least three more assets to its portfolio before the end of the year.

Related Readings 

Centennial secure a prime industrial infill site in Bulimba | The Industrialist

Centennial's $20M Capital raise sparks investor interest in Cleveland Industrial Park Trust | The Industrialist

Centennial's Central West Distribution Centre, St Marys completely leased - Colliers | The Industrialist