Australia’s largest listed industrial fund, Centuria Industrial REIT (ASX: CIP), has broken ground on a new 12,300sqm industrial facility in Canning Value, WA, addressing Perth’s prevailing strong sector tailwinds underpinned by low vacancy rates, limited forecast supply and rising industrial rents.
The 2.5ha brownfield site was secured off-market in June 2022 and Centuria identified the rare opportunity to develop an institutional-grade dual-tenancy facility within the core industrial market of Canning Vale. The development has an estimated on-completion value of c.$31million.
Perth’s strong leasing conditions reflect a low 0.9% vacancy rate, which is driving exceptional 19.6% year-on-year rental growth within the prime market– the second highest rental growth recorded within Australia.
Compounding these conditions is a limited new supply of only 55,900sqm of development currently under construction and coming to market by mid-2023, of which, 47,350sqm is already pre-committed.
Jesse Curtis, CIP Fund Manager and Centuria Head of Industrial, said, “Perth’s core, supply-constrained industrial market provides an exceptional opportunity to capture strong tenant demand from the burgeoning ecommerce sector and businesses looking to increase their on-shoring capacity to avoid supply chain disruption.
“CIP is seeking to further increase its exposure to various WA industrial markets and this development project provides an opportunity to capture rental growth. Importantly, we have selected a dual-tenancy sustainable design configuration to meet demand for last-mile, urban infill industrial facilities.”
Located at 204 Bannister Road, the high-quality industrial facility will be developed by Centuria’s inhouse development team, which has appointed local contractor Cloud Heights Building Co. Practical completion is anticipated in Q2 2023.
Andre Bali, Centuria Head of Development added, “We have a strong track record for delivering high-quality, market-leading, industrial developments across Australia, more recently in New South Wales, Queensland, South Australia and Victoria. While the development market is currently facing challenges, such as access to quality sites, cost and funding escalation, supply chain and resourcing constraints, Centuria and CIP continue to find value-add development opportunities for our investors.
Mr Bali added, “For all our industrial developments, we target a minimum five-star green star rating to ensure our tenants are provided with future-proofed, highly sustainable property, which aligns with Centuria’s broader ESG mandate.”
The development’s sustainable initiatives include, amongst other things, a PV solar system, recycled water, EV forklift charging stations, sustainable and recycled building materials and native drought tolerant vegetation.
The two-tenancy industrial asset will respectively provide 8,600sqm and 3,700sqm of institutional-grade industrial accommodation. The warehouses will incorporate a 13.7m clearance, ESFR sprinkler system, multiple on-grade doors, recessed loading docks, container rated hardstand and corporate offices. The asset will also be future proofed for installation of a 38m super awning on the larger industrial unit.
The site is well positioned in proximity to the Roe Highway, the Jandakot Airport and a growing residential population.
Centuria manages three assets in Canning Vale with this development adding to the critical mass in a core industrial market. On completion of the 204 Bannister Road development, Centuria’s managed WA portfolio of urban infill industrial assets will increase to 15 assets worth c.$436million.
Centuria’s recently completed industrial developments include the $24.3million facility at 42 Hoepner Road, Bundamba, Queensland, fully leased to Australia Post and Jaycar Electronics; and the soon to be opened $88.8million six-unit industrial estate at 95-105 South Gippsland Hwy, Dandenong South, VIC, fully leased to a variety of tenant customers. Shortly, Centuria will also break ground on a five-unit industrial estate at 90-118 Bolinda Road, Campbellfield, VIC, with an estimated end value of c.$104million.
Centuria is also developing a $42.8million warehouse at 36 Caribou Drive, Direk, SA, on behalf of the unlisted open-ended Centuria Diversified Property Fund. The development is 100% pre-leased to Apex Steel Suppliers on a 15-year term and due to open in early 2023.
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