As competition for scarce industrial infill sites in Sydney's inner south heats up, Centennial has entered the fold securing a prime ~9,600sq m logistics site, at Matraville for $39.1m after a lengthy search for a suitable mid-space, value-add investment in South Sydney for its Enhanced Value Partnership (EVP) fund. 

Acquired from EG Funds and brokered by Colliers and JLL, the well positioned site, 700 metres from Port Botany, at 81-87 Beauchamp Road Matraville contains a vacant (6,240sq m GLA) multi-tenancy warehouse that had previously generated an annual passing income of ~$1.282m.

The site benefits from favourable zoning that provides flexibility to accommodate large format and showroom retailers in addition to the existing strong demand from last mile logistics operators. 

Centennial will refurbish and reposition the property to capitalise on the inner south’s standing as the nation's tightest held industrial market and low vacancy rate currently sitting at 1.8 per cent. 

Having identified a lack of newer warehouse stock catering for the mid-size occupier market, Centennial will roll out its mid-space, value-add strategy to focus on businesses seeking between 870 to 1,300sq m of space. The property benefits from six individual tenancies, each with their own office accommodation. 

David Cupit, Centennial's Head of Property Funds said the site caught the company's interest given it could be acquired with 'vacant possession' and the warehouse requiring only minimal capital expenditure to bring it up to a standard where it could generate premium rental returns.

"Following refurbishment, the asset's net market income has been assessed at $375 per square metre (psm), which is up 83 per cent on the site 's previous rental rate of $205 psm,” Mr Cupit said.

"Once refurbishment works are complete, we are confident of achieving these rents which will be driven by the refurbished accommodation and the site's superior location in one of the country's most land-constrained industrial markets."

Adding further pressure to the tightening vacancy rate in the south's industrial precinct is the withdrawal and rezoning of industrial land for alternative uses which is prevalent, placing a substantial strain on the area’s remaining industrial stock.  

The Beauchamp Road site benefits from its proximity to important Sydney transport nodes including Port Botany, which is the largest container port in NSW, handling 2.8 million containers per year. Additionally, the property provides excellent connectivity to Sydney International Airport, being 4.8 kilometres from the terminal along with connectivity to major M1, M5, M8 motorways.

"We have been seeking a site of this calibre in Sydney's inner south for some time but have been pragmatic in waiting for the right opportunity," Mr Cupit said.  

"We believe now is the right time to implement our mid-space strategy given much of the sector’s strength lies within the occupier market, supported by a low vacancy rate, significant levels of rental growth and low uncommitted supply. 

"It's these solid market indicators, coupled with the site's great location close to major transport infrastructure, plus its flexible zoning to accommodate both industrial and large format retail, provides an excellent opportunity for Centennial to take advantage of this market."

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