$150 million industrial estate fully leased prior to completion as tenants compete for brand-new facilities5 May 2023
Cadence Property Group and GPT have recently completed a joint venture project, the Keylink Estate, in one of Victoria’s most sought-after core industrial locations, Keysborough.
The project comprises a total GLAS of 60,686sqm across four individual tenancies with an estimated completion value of approximately $150 million. Following a 10-year pre-lease secured by a leading national retailer, Early Settler, who has committed to the largest tenancy of 37,890sqm, Cadence and GPT appointed Colliers to lease the three remaining tenancies, totalling 22,796sqm of gross lettable area (GLA).
Colliers worked in conjunction with the developers and managed to fully lease the remaining spaces at Keylink Estate prior to completion to a mix of multinational and corporate occupiers, including Hartman Group, AFS Logistics and Mohawk Industries subsidiary Premium Floors.
“Undertaking a speculative roll of this scale was ambitious, but the supply and demand dynamics, particularly in the south east, gave us and our partners confidence to secure tenants in a timely manner,” said Charlie Buxton, Managing Director at Cadence Property Group.
“To have 100% leased Keylink Estate prior completion outperformed all of our expectations and demonstrates both the strong demand for quality industrial space in the area and the unique market environment we are currently experiencing,” Mr Buxton added.
Hartman Group, a leading manufacturer and distributor within the DIY, trade and leisure markets, leased a 7,450sqm tenancy, and integrated warehouse and distribution service specialist, ASF 3PL Logistics, has committed to 8,667sqm, enabling both groups to grow their businesses driven by increasing customer demand.
Shayne McDonnell, Director of AFS 3PL Logistics, said, “We were attracted to Keylink by the strategic location for our business. This new site complements our existing warehouse network and allows our customers to consolidate their transportation and warehousing requirements with AFS Logistics to achieve an efficient ‘’end to end” supply chain solution.”
‘’The addition of the new facility increases our 3PL warehousing footprint to ~60,000sqm across a number of sites and gives our existing and new customers confidence that we can support their growth requirements,” added Mr McDonnell.
Premium Floors, a leading supplier of quality flooring products, secured the final tenancy of 6,679sqm, relocating from a smaller facility in Dandenong South.
Jamie Costello, Premium Floors Australian General Manager, adds, “As Australia’s largest wholesale supplier of timber and timber look flooring, Premium Floors was drawn to the super-high clearance of the warehouse, offering significantly more cubic capacity than our previous facility.”
James Stott, National Director Colliers, continues, “Ongoing levels of strong demand have led to low vacancy rates and restricted conditions for occupiers nationally across all major metro industrial markets. Melbourne’s south east is currently one of the most tightly held industrial markets in Australia, with a current vacancy rate of 0.23%, or three vacancies > 3,000sqm out of a total of 1,271 buildings.
“This environment has triggered significant competition in the marketplace for quality leasing opportunities, with occupiers competing fiercely to secure space for the limited number of buildings available. We expect the supply side constraints to continue for occupiers until enquiry levels abate and the speculative development pipeline levels can sufficiently satisfy demand,” said Mr Stott.
In 2023, 37 speculative facilities are being delivered in Melbourne’s south east, comprising 311,611sqm of GLA. 24 of these tenancies have already been committed, representing 65% of this year’s development pipeline. Based on demand levels in the marketplace Colliers expect all of 2023’s development pipeline to be committed to by Q3 2023.