Inner Southwest industrial market continues to benefit from strong rental growth

21 March 2022

The unprecedented demand for the industrial and logistics sector looks set to continue in Sydney’s southwest, thanks largely to the significant growth of e-commerce and rental growth.

Prime rental growth in the inner southwest, which broadly includes Bankstown, Milperra and Padstow industrial precincts, increased by 9.4 per cent in 2021 as occupiers actively search for distribution centres and last-mile hubs that allow inventory to be stored closer to the end consumer.

Rents in infill markets across Sydney have outperformed with prime growth of 10.0 per cent recorded in 2021, well above the 3.8 per cent for outer ring submarkets over the same period.

Investors looking to break into this tightly held precinct have a key opportunity at 36-48 Ashford Avenue in Milperra, which has been listed for sale.

Split across two buildings and with a total land area of 11,200sqm, the property has 90m frontage to Ashford Avenue, comes with IN1 General Industrial zoning and offers future flexibility for an incoming buyer.

Providing excellent warehouse clearance of up to 10.8 metres, modern office accommodation throughout and ample on-site designated parking spaces, the property is a unique opportunity for owner-occupiers, investors or value-add buyers.

The Colliers team of Trent Gallagher and Hamish Miles have the listing in-conjunction with Jon Orsborn of LJ Hooker Commercial with a price guide of over $25 million.

“This unique investment opportunity offers purchasers a rare opportunity to secure a substantial land holding in the booming inner southwest market, offering substantial rental reversion uplift through building refurbishments and/or splitting buildings to maximise rental returns,” Mr Gallagher said.

“It also offers prospective buyers the ability to capture increased tenant demand in a market with record low vacancy rates,” Mr Miles added.

The property offers immense potential for prospective purchasers to occupy, invest and capitalise on the strong leasing fundamentals in the booming southwest market.

Over the past decade, prime rents in the inner southwest precinct have recorded a compound annual growth rate of 3.4 per cent, well above the broader Sydney average of 2.8 per cent per annum over the same period. The outperformance of the Inner southwest precinct is forecast to continue as demand continues to outpace availability and supply.

“This is an exceptional gateway for purchasers to position themselves in the infill Milperra pocket and take advantage of the current gentrification of the area,” Mr Orsborn said. 36-48 Ashford Avenue in Milperra is for sale via expressions of interest closing 4:00pm (AEDT) Tuesday 19th April 2022.