Leading agencies Savills and Colliers have been appointed to market the Homebush Logistics Centre in Sydney’s Central West at 201 Parramatta Road, Homebush, on behalf of developer joint-venture partners Trumen and Norman Property.
With price expectations of over $40 million, it represents a rare opportunity to secure a brand-new logistics estate in Central Western Sydney’s industrial hub – one of Sydney’s strongest and most tightly held institutional-grade investment markets.
The state-of-the-art estate is due for completion in October 2022 and occupies a site area of 2.3 hectares and has a gross lettable area of 10,491 sqm across eight individual units.
“The Homebush Logistics Centre has set a new benchmark for estates in Sydney’s Central West, elevating the standard and achieving premium rents. Vacancy in the precinct is at an ultimate low of 0.5%, while underlying tenant demand remains elevated – particularly in this convenient ‘last mile’ location offering outstanding proximity to one of the state’s most densely populated catchment areas,” said Michael Wall National Head, Industrial and Logistics at Savills.
“Supply chain issues throughout the COVID-19 pandemic coupled with the growth of on-demand delivery have highlighted the need to hold incremental inventory closer to the customer to meet delivery times, and this has pushed rents to historic levels,” he said.
According to Savills and Colliers, demand for Western Sydney industrial property continues to outstrip supply with more than 1.5 million square metres in active tenant briefs within the market. Savills and Colliers Research reveals that prime net face rents in the Central West have increased by 41% since 2019 and, over the last decade, have risen almost 62% – more than any other precinct in Sydney.
The Estate offers unrivalled access to Sydney’s arterial road network with high exposure to Parramatta Road and the M4 Motorway with flexible B6 Enterprise Corridor zoning, allowing for a range of future uses and inherent upside.
There will be strong competition among investors and institutions vying for Homebush Logistics Estate.
“High quality, multi-tenanted assets within Sydney’s infill logistics markets such as the Central West are highly sought-after by institutional investors due to the historical low precinct vacancy rate accelerating strong rental growth forecast” said Gavin Bishop, Managing Director, Industrial at Colliers International.
“The lack of leasing options is continuing to drive strong rental increases across the Central West market and Homebush has been the standout performer at 21.7% over the past year. Strong rental growth is forecast to continue with new supply in the pipeline expected to fall well short of demand” said Gavin
“Homebush and the broader Central West market are land constrained and given its access to major transport infrastructure, there has been strong demand from occupiers seeking central warehouse space.
Within 30 minutes of Homebush, over 3.6 million residents can be reached in a 30-minute drive time which highlights the appeal from tenants”.
Despite the recent disruptions to economic recovery, ongoing challenges facing the supply chain, escalating energy and commodity prices, and a surge in inflation, the appetite from households for retail spending remains resilient. The latest retail data shows a further 0.9% growth in May, representing 10.4% growth over the year and a new record high.
The household saving rate remains elevated, and although it has eased in recent months, it remains above its pre-pandemic level, with many households saving a large amount of money which they are using to offset higher mortgage payments and sustain their appetite for spending. While there is some uncertainty for household spending in the coming months due to higher inflation and the recent rise in interest rates, the share of online retail spending remains at the high levels seen consistently through the last two years. In May 2022, online retail spending represented 10.7% of total retail sales, similar to the April share of 10.8%. This is above its five-year average of 7.9% and nearly double its average share in 2019 of 6.3%.
While the growth in the on-demand delivery market has contributed to the competition for last-mile, the high cost associated with these sites, as well as the supply chain, has forced retailers and logistics operators to improve or scale up their distribution models to build efficiencies. This includes moving facilities closer to the customer or upgrading their supply chains to facilitate tech and utilisation strategies to use their site more efficiently. This is contributing to the impetus for last-mile sites in areas with high population density.
Homebush Logistics Estate is offered for sale via an Expressions of Interest campaign closing Friday, 26th August.