Rare Silverwater cold storage site on the market12 January 2022
A significant 4,216sqm cold storage industrial site located in a tightly held region of Western Sydney has come to market.
The property at 59-61 Derby Street in Silverwater comes with an extensive brand new ‘central kitchen’ fit out which provides a functional space for food production, preparation and packing, as well as a 1,600-pallet freezer. It has a building size of 3,566sqm and is exclusively listed with the Colliers team of Phillip Bradac and Tony Durante.
The cold storage market in Australia is valued at almost $5.5 billion, Colliers research shows. However, despite the sector’s recent growth, it remains relatively limited, with its share towards total warehouse space estimated to be just 2-3 per cent.
“Demand for the industrial market in general is extremely high within the region thanks to very limited stock. Refrigerated storage demand is largely driven by domestic food consumption and pharmaceuticals, as well as the pick-up in online grocery sales and the meal kit segment,” Mr Bradac said.
“The tightly held central west industrial market has experienced unprecedented demand for both lease and sale offerings. The continued trend has seen an extremely limited number of assets being offered for sale and record prices being achieved, in fact in most cases each property sold eclipses the per square metre rate of prior sales,”
The property comes with IN1 General Industrial zoning and has several quality features, including a new power kiosk on site, large volume gas supply, extensive floor drainage and a separate internal yard.
In 2020, almost $700 million in cold storage transactions occurred, while $490 million was traded from such assets up to December 2021. While specialised, the characteristics that core investors look for in industrial assets remain the same, including location, scale, WALE, and lease covenants.
From an investment perspective, demand has risen in recent years as institutions have come to better understand the fundamentals driving the market, including population and consumption growth, evolving consumer behaviours, and greater demand for food and pharmaceutical products.
“We have seen rates move from $3500 to $4000 per sqm in 2019/20 to more than $7000 per sqm on recent transactions. In most cases it is the owner occupiers seeking ‘centre of Sydney’ location and they’re taking advantage of low interest rates,” Mr Durante said.
“Recently a property in Silverwater that sold for $10m in mid-2020 was re-sold at $15m to a party that missed the opportunity previously. It is anticipated that continued lack of supply will drive rental increases, lower incentives, raise prices and sharpen yields.”
No. 59-61 Derby Street in Silverwater is being offered for sale via an expressions of interest campaign.