Commonwealth-Backed Industrial Asset in Adelaide’s Inner North Sells for $25.25M

A high-quality industrial office and warehouse facility occupied by the Commonwealth of Australia has sold for $25.25 million in an off-market transaction, highlighting sustained investor demand for securely leased, government-occupied industrial assets in South Australia. 

The property at 6-14 Oxenham Street in Dudley Park was acquired by a local private investor from Peak Equities in a transaction negotiated by Knight Frank’s Max Frohlich and Ryan Mills. 

The asset comprises approximately 4,420sq m of modern office and warehouse accommodation across a 9,000sq m site, with low site coverage of around 31%. 

Completed in 2013, it offers two levels of office accommodation with lift access alongside high-clearance, clear-span warehousing with an internal clearance of approximately eight to nine metres. 

Originally developed for Spotless Group and subleased by Knight Frank to the Commonwealth since completion, the asset benefits from a long-standing government occupier that has committed significant capital to a purpose-built security fitout reflecting its specialised operational requirements. 

The asset is underpinned by a new five-year Commonwealth lease commencing 1 July 2026, with two further two-year options and fixed 3.5 per cent annual rent reviews, and generates net passing income of approximately $1.6 million per annum, plus GST. 

The facility sits approximately 5.5 kilometres north of the Adelaide CBD, within an established inner-northern industrial precinct close to Islington railway station and the metropolitan road network. 

Mr Frohlich said Knight Frank has had a longstanding history with the asset and the result reflected the depth of demand for institutional-grade industrial assets with secure, government-related income nationally. 

“Modern facilities offering secure income, quality improvements and Commonwealth occupancy remain highly sought after by private and institutional investors alike,” he said. 

“The Commonwealth is a long-term tenant that has committed substantial capital to the building, which reinforces both the security of income and the likelihood of continued occupation.” 

Mr Frohlich said South Australia’s position at the centre of Australia’s defence build-out was deepening the pool of government and defence-linked tenants across the State. More than $100 billion in defence investment is committed or planned in South Australia, spanning naval shipbuilding, submarine construction and advanced manufacturing, with the AUKUS programme endorsed by the United States in October 2025. Adelaide is home to seven of the world’s ten largest defence companies, and defence-sector employment grew 71 per cent in the four years to 2023/24. 

“That level of committed, generational investment is structural rather than cyclical,” he said. “It is driving employment, supply-chain activity and, increasingly, demand for the kind of secure, Commonwealth-leased real estate this asset represents.” 

Mr Mills said the transaction reflected the continued strength of Adelaide’s industrial market. 

“Investors remain focused on assets that pair income security with exposure resilient growing tenant fundamentals,” he said. 

“Here, the purchaser has secured a modern, well-located facility with a long-standing Commonwealth occupier and significant tenant investment in the improvements. 

“Conditions across Adelaide’s industrial market remain firmly in landlords’ favour, with investor demand continuing to outweigh the supply of quality stock, particularly for assets with strong lease covenants and specialised improvements.”