2016 Industrial RFR H1_web

Connecting the dotsThe rise of intermodal terminals

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First Half 2016Australia and New Zealand

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Connecting the dots – Intermodal Terminals 5

Industrial market overview

Sydney 14

Melbourne 21

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Our experience – Industrial 42

Contents

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3Industrial | Research & Forecast Report | First Half 2016

12 Banfield Court, Truganina VicSold on behalf of Goodman Property Services (Aust) Pty Limited

4 A Colliers International publication


Connecting the dots – Intermodal Terminals By Daniel Lees Associate Director | [email protected]

The industrial property sector usually follows key infrastructure spines, and intermodal developments on the scale we are now witnessing some of the most exciting infrastructure developments in recent times.

Supported by multiple drivers such as the long term demise of domestic manufacturing, a growing reliance on imports and the need to alleviate congestion at bottlenecks, the prospects for intermodal facilities are indeed bright.

While the development of intermodals and certainly rail transport is not new, we have not seen development plans for intermodals on the scale we are witnessing today. The Moorebank development in Sydney, a joint project between Qube, Aurizon and the Government is the largest in Australian’s history. In Melbourne, plans from private property and logistics firm SALTA is looking to develop three intermodal facilities that will link to the Port of Melbourne. Additionally, international shipping and logistics company MAERSK has been considering the replication of overseas intermodals domestically.

The topic is therefore a contemporary one and worthy of discussion. In this paper we look at intermodals, their relevance within the supply chain and the impact on industrial property sector.

What are Intermodal Terminals?Intermodal Terminals (IMTs) are large industrial facilities which allow the transfer of shipping containers between ships, trucks and/or rail to transport goods to and from seaside ports.

These facilities are located along supply chain supporting infrastructure such as dedicated freight lines and arterial roads in addition to coastal ports which link to industrial precincts further inland that service domestic and international containerised trade.

IMT’s have a central role in the broader shipping container transport system. Their importance, currently significant to the supply chain, is set to increase with expectations of strong growth in trade over the next twenty years. This growth, fuelled by our enduring national pastime of consumption and the expected strong economic growth of our international trading partners, will also be influenced by national regulatory reform, and key port and freight network infrastructure projects.


FREIGHT RAIL TRANSPORT – USAGE BREAKDOWN

19%

69%

12%

Intermodal

Mining

Primary Producers

Source: Colliers Edge/Ferrier Hodgson

Bulky items such as iron ore and coal primarily travel by rail to bulk export ports, and this is the key sector serviced by the rail industry. Intermodal freight accounts for approximately a fifth of all rail transport in Australia.

Just as it’s important to locate an IMT close to existing transport, logistic activities and other complementary industrial activities, it is also important to ensure the IMT has enough land to enable these parties to establish their operations on site or nearby. This explains the significance of projects such as the Moorebank Integrated Precinct, which is set to become Australia’s largest intermodal freight hub. Comprised of 243 hectares of land in South Western Sydney, the facility will contain up to 1,000,000 sqm of warehousing when fully developed. With its existing connectivity to road and rail together with an abundance of land for development, Moorebank has created a blank canvas for operators.

In Melbourne, SALTA properties and the Victorian government have been working together to create a rail and road based network of metropolitan intermodal hubs. The network will link the Port of Melbourne to IMTs at Altona in the south west, Dandenong in the south east, Hastings further south and Somerton in the north to complete the wider Melbourne intermodal network.

It can be difficult to secure land on the scale required for IMTs along rail infrastructure within key industrial markets. Existing land is either fragmented or built out meaning that acquisitions for appropriate sites can be costly or impractical. This explains the significance of the opportunities currently available within these large IMT projects.

Major Australian IMT DevelopmentsSALTA’s Inland Ports Solution – Melbourne Metropolitan Intermodal System (MIS)SALTA is working with state government to redevelop three intermodal sites around Melbourne using existing freight precincts at Somerton, Altona and Dandenong South

• Altona Intermodal Terminal

▶ Features a 40ha container depot site, purpose built warehousing, container holding interchange facility and 750 metre long rail tracks

▶ Current tenant – Maersk container handling facility (five hectares)

• Dandenong South Intermodal Terminal

▶ A 185ha site comprising full and empty containerstorage areas, over 500,000 sqm of purpose built warehousing, and onsite rail track capable of servicing four metropolitan rail shuttles simultaneously, providing high access intermodal rail links to the Port of Melbourne and the proposed future rail line to Port of Hastings

▶ Current tenant - Bunnings

• Somerton Intermodal Facility▶ SALTA are working with current owners, Austrak,

to reticulate the track, completing the Metropolitan Intermodal System

SIMTA’s Moorebank Intermodal Terminal - Sydney Moorebank Intermodal Company (MIC), Qube, Aurizon• Commonwealth government own two-thirds of the land, the

other third is owned by a consortium of 67 per cent Qube and 33 per cent Aurizon, the Sydney Intermodal Terminal Alliance (SIMTA)

• SIMTA will develop and operate the whole Moorebank freight precinct under a 99-year lease

• Qube will operate import/export port shuttle and interstate terminals handling up to 1.5 million TEUs per annum

• The under-construction Moorebank Intermodal will connect to the Southern Sydney Freight Line (SSFL) via a bridge over the Georges River connecting to the southern boundary of the precinct

• A 243ha site comprising an import-export (IMEX) and interstate terminal, 850,000sqm of warehousing facilities and vehicle access from a new Moorebank Avenue/Anzac Road intersection via the M5 Motorway

Mfive Industry Park, 1 Moorebank Avenue, Moorebank NSW Valued on behalf of Altis Property Partners



to offshore goods and imports which in turn has placed volume pressure on our port network. Additionally as retail trade moves increasingly to eCommerce, the challenges for our logistics and supply chain networks grow. The biggest challenge for eCommerce in Australia is the cost of getting goods off ships, to warehousing quickly, then onto consumers in a seamless, effective manner. It therefore makes sense that IMTs that have direct rail links to ports, warehousing facilities and road connectivity, present a solution for large volume retailers looking to achieve efficiencies across their overall supply chain.

AUSTRALIAN MANUFACTURING PMI VS AUD/USD

30

35

40

45

50

55

60

65

0.4

0.5

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0.7

0.8

0.9

1

1.1

1.2

2007

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2009

2010

2011

2012

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2015

2016

AUD/USD (RHS) AU PMI (LHS)

Source: Colliers Edge/Bloomberg

The quantum of growth in imports and exportsInternational container trade in Australia is concentrated around the five mainland capital city ports: Adelaide, Brisbane, Fremantle, Melbourne and Sydney and the Australian Government Bureau of Infrastructure, Transport and Regional Economics (BITRE) report on Containerised and non-containerised trade through Australian ports to 2032-33 forecasts a national average annual growth of 5.1 per cent of containerised port trade between 2012-13 and 2032-33.

By 2032-33, containerised trade is predicted to grow to a total of 19,377,000 TEUs (twenty-foot units) from an actual total national trade in 2012-2013 of 7,165,000 TEUs, achieving total growth of 270 per cent in two decades. Currently, Australian ports are under stress from current import and export trade volumes which has created bottle necks in our ports, mainly Sydney, Melbourne and Brisbane. These bottle necks have transferred to the roads, causing traffic congestions along the main arterials of our cities.

CONTAINERISED TRADE BY PORT

0%

1%

2%

3%

4%

5%

6%

7%

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

Brisbane Sydney Melbourne Adelaide Fremantle Other Ports All Ports

Aver

age

Annu

al G

row

th

Trad

e Vo

lum

e ('0

00 T

EUs)

Actual 2012-13 Forecast 2032-33 Forecast Growth Rate 2012-13 to 2032-33 (RHS)

Source: Colliers Edge/BITRE

InterlinkSQ – Brisbane’s Inland Intermodal Terminal, Toowoomba• Toowoomba is the second largest inland city in Australia and

the fastest growing economic region in the state, regarded as the service centre for surrounding mining and agriculture regions

• 140 kilometres and just one hour from Brisbane, it's located around the intersection of four major highways 13 kilometres west of Toowoomba CBD

• The intermodal terminal covers 200ha of the Toowoomba Enterprise Hub (a total of 2,000ha), offering connectivity via road, rail, air and sea

• Comprising open access rail terminal with three kilometre frontage on the existing rail line, it will adjoin the proposed Melbourne to Brisbane inland rail line as well as housing the current West Moreton Rail Line

• The site offers over 100ha of private direct terminal access for InterlinkSQ sites

Drivers of IMTsManufacturing and eCommercePrior to early 2015, the domestic manufacturing sector had been experiencing a period of contraction, hindered by a combination of high labour costs and currency valuation relative to other global regions. More recently the manufacturing sector has moved to an expansion phase, helped by the depreciation of the Australian dollar however we would be cautious extrapolating this trend too far. The offshoring of manufacturing remains compelling for businesses and our dollar has recently begun to strengthen. To fill the manufacturing void, Australian retailers and consumers have turned

5 Reliable Way, Mount WellingtonSold on behalf of Delmaine Properties Ltd


Bottlenecks and CongestionThe current capacity of our infrastructure assets combined with the forecast increase in trade volumes are pushing both the public and private sectors to work toward addressing the issue.

According to Geoffrey Knowles, Supply Chain Consulting Director at Siecap Advisory, the value proposition of IMTs is clear in that they facilitate the movement of containers in and out of ports faster to alleviate congestion in the port itself. The amount of land that ports have is a finite resource, so the amount allocated to container parks and short term storage is very limited. For example container stacks are constrained in terms of height and density, so space allocation becomes a precious commodity and port charges for storage can become material. Additionally, the heavy reliance on road-to-road models within ports exacerbates congestion which then has a detrimental impact on the environment and the wear and tear on road networks.

So far, IMTs have been proven to reduce bottlenecks within ports and assist in the reduction of truck transport across the country. Sydney’s Moorebank is predicted to remove approximately 3,000 trucks from Sydney roads in an effort to reduce carbon emission, inner city and metro congestion and achieve faster delivery times, increasing productivity and reducing business operational costs. In this case, Moorebank Intermodal will be the largest and closest IMT located to a port making these positive business claims all the more achievable.

Looking forward, the ongoing automation of operations within ports will also play a role in alleviating congestion levels. Efficiency measures are taking place at Hutcheson Ports, Port Botany and DP World, and discussions with industry participants suggest that stevedores acknowledge the importance of driving further port efficiencies through automation.

CONTAINERISED TRADE: ALL PORTS

0

5000

10000

15000

20000Actual Forecast

1998

-99

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

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2018

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-29

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2030

-31

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-32

2032

-33

'000

TEU

s

Exports Imports Total

Source: Colliers Edge/BITRE

ChallengesPrivatisation of the ARTCTalks on this issue are still in progress but generally speaking the privatisation of rail results in increased flexibility and an altering of cost structures. Private train operators have been in existence for some time and generally run very efficient services, but overall utilisation comes back to track capacity which in turn usually falls into government hands. So unless the government is going to invest in additional track capacity, there is only so much utility that can be extracted from the current operating structure.

The privatisation may achieve this outcome however it may come at a higher cost structure. Of course all these talks are still in progress therefore speculating on the final outcome is premature at this stage.

Rail vs Road Given that Australian supply chains are very much dominated by road, and IMTs incorporate rail, the road vs rail debate is raised frequently. Supporters of each transport mode tend to argue that one is superior to the other when in reality, they are complimentary services and will continue to be so. Of course there are pros and cons for each.

At a high level transport by train tends to be cost-effective over long distances for larger quantities (~200 kilometres breakeven to road) with the downside being an element of inflexibility when it comes to delivery destinations and times. Road is more flexible in its route and timing of delivery and tends to be more cost effective over shorter distances. Road transportation is however a significant contributor to overall road congestion and air pollution problems.

Intermodal freight transportation can provide a means to move containers quickly from the port allowing operators to avoid additional port storage costs and traffic delays. It also provides a fast connection to other interstate rail and road links further inland from ports.

As congestion and pollution issues become more significant, increasing the use of IMT’s would be beneficial to the surrounding environment, however the lack of serviceability and geographical reach of the existing rail networks means that gaps remain.

34-42 Sheppard Street, Hume ACT Valued on behalf of Goodman Australia Industrial Fund (GAIF)



Road and rail to remain complementaryWe suggest both road and rail will be required in a complimentary sense to alleviate Australia’s growing supply chain pressures, however road transportation has not been without its developments, maintaining its dominance over freight transport. The WestConnex Motorway and the Hume Highway will incorporate access for heavy vehicles and by identifying parts of the NSW road and rail network with a significant freight corridor function, their capacity can be augmented with priority infrastructure development. This work is underway with heavy vehicle rest areas and overtaking lanes on the Newell Highway. Over the past two decades, Victoria has led the nation with the introduction of larger B-Double combination trucks, which now have access to 99 per cent of the State’s arterial road network.

The impact on the industrial property sectorHas IMT development led to increased activity?Given that Moorebank is the largest and most contemporary IMT development we can use it as a proxy for gauging the impact IMTs have on the industrial property sector.

As the existing warehousing within the Moorebank project comes to market and the later construction stages approach, we have witnessed a significant pick up in the level of industrial property activity. Overall enquiry levels in the region have increased with assets located near Prestons, such as the AMP owned Crossroads Logistics Centre, generating high demand. The south western corridor is one of Sydney’s major growth arteries, and Moorebank will only contribute further to this growth over time. There has already been some large scale activity occurring in the area with Toll Group recently leasing 60,000sqm in the nearby Prestons facility. Within the Moorebank facility there has also been high levels of enquiry for the existing warehousing being brought to market, with a total of 240,000sqm available for lease in the first instalment. At this stage, it appears that the rents within the existing warehousing at Moorebank are broadly in line with other prime assets however the pricing will be market driven. The amount of initial supply coming online sounds significant, however it wouldn’t take too many large scale operators signing leases for the initial stock to be absorbed completely.

3 Skyline Place, Frenchs Forest NSWSold on behalf of DEXUS Property Group

ROAD RAIL

Typical cargo

Aggregate building supplies such as sand and gravel as well as grain.

Typically non-bulk freight is transported by road.

Urban road freight accounts for 28 per cent of all road freight.

Iron ore, coal and grain account for over 75 per cent of total rail freight.

Rail is most popular with bulk freight.

PricePrice is calculated on time-basis, which depends heavily on traffic conditions and parties involved in the movement.

It can be difficult to forecast road transport costs as a result.

Rail transport costs are charged on a volume basis, therefore can maximise train utilisation to reduce unit cost for higher revenue.

Rail can also charge an incremental tonnage over and above the base rate for a container i.e. the heavier the cargo, the higher the freight charge.

Timing

Congestion on arterial roads is becoming an issue, blowing out costs and delivery times for operators, however they typically arrive at their destination sooner than if rail were used.

Road transport departs frequently and is more flexible.

Interstate transport is typically 2-4 working days.

Freight link rail schedules are commonly rigid and inflexible departing daily.

Interstate transport takes approximately 1 week.

TransferShould road be used from the ports (i.e. one transport mode from port to distribution centre), the likelihood of damaged cargo reduces significantly, leading to less/no damaged stock.

Shunting – the process of moving containers from trains to trucks – can cause more damage as more than one mode of transport is involved.

Size All cargo sizes are able to be transported by truck, however multiple trucks will most likely be utilised within the fleet.

Over-dimensional cargo isn’t permitted on the rail system due to the fixed width of the rail paths and height of bridges.

VolumeTruck fleets are needed to transport one shipment of cargo, dealing with road congestion adds the potential impact to costs and delivery times.

Rail allows a greater number of containers to be moved in a single shipment, freeing up truck fleets and increasing capacity.


INDUSTRIAL TENANT ENQUIRY BY REQUIREMENT

0%

20%

40%

60%

80%

100%

2015201420132012Relocating New Business Unit Expanding

Lease Expiring Project Space Start Up

Downsizing Consolidating Other

Source: Colliers Edge

Types of tenants to be attractedThe types of tenants being attracted to the facility and its surrounds include large scale retailers that have high volumes of container movements. This makes sense as the higher volume users are most likely to gain overall efficiencies through scale in an intermodal environment. Logically thinking, it would be reasonable to assume that many third party logistics (3PL) operators currently situated in precincts such as Erskine Park and Eastern Creek could either move or expand their business operations to warehousing within, or in close proximity to IMTs such as Moorebank. The rationale is that larger tenants trying to drive scale will most likely secure leases here (given current enquiry levels) and then 3PL providers will be required to fulfil final logistic legs to distribution centres elsewhere in NSW.

INDUSTRIAL TENANT ENQUIRY - INDUSTRY TYPE

0%

20%

40%

60%

80%

100%

2015201420132012

Manufacturing Retail Trade Engineering Transport and Travel

Construction & Trade Agri, Forest, Fish Resources Source: Colliers Edge

Land availability and the importance of infrastructure hubsTo date, land releases have been concentrated along Sydney's Western Corridor. Land availability, especially on the scale we have witnessed at Moorebank, is rare. With the south west expected to remain one of Sydney’s main growth corridors, we estimate that industrial warehousing demand in this region will remain high with only a limited amount of available supply. Additionally, industrial property developments have tended to

track major infrastructure networks, such as the main arterial roads servicing Sydney (M4/M7/M5/M2). Therefore we also anticipate that the creation of Moorebank as Australia’s largest IMT will also spur demand for industrial real estate in the region going forward.

Not all users will be drawn to IMTsIt’s important to understand that the location of a business’s warehousing or distribution centre will always be determined by weighing up the efficiencies gained by scale and proximity to the end user. So while a larger user may generate economies of scale by being located within an IMT, a smaller user may opt for road-to-road logistics supply chain from a port directly to a distribution centre in close proximity to its end users.

Logistics and the “pivot” into real estateIMTs can allow traditional freight and logistics companies to pivot from their core business of logistics operations towards property management. These companies may either retain assets ownership to generate annuity style income or divest assets to fund further investment. It’s reasonable to assume that numerous funds and managers would be interested in acquiring or investing in such assets given their strategic importance and prime location.

OutlookLarge scale IMT assets, such as NSW’s Moorebank, SALTA’s Nexus (Melbourne) or InterLinkSQ (Toowoomba, QLD), are without doubt going to become more integral within Australia’s national distribution model. As these assets gain scale and become more integrated, we feel it’s a foregone conclusion that major players within the industrial market such as high volume container importers, logistics operators, property owners and property developers will gravitate towards them over time. While this may not happen immediately, it’s likely to occur over the coming years given that the industrial sector develops along major infrastructure corridors. It will most likely

133 Lenore Drive, Erskine Park NSWSold on behalf of Goodman Funds Management Australia Limited



commence with the large market players that can easily generate economies of scale utilising such facilities but will then trickle down to smaller players as the desire for proximity increases.

It’s possible that as these extremely large scale IMTs gain momentum, the tenant mix within other major industrial centres could change. For example we may see 3PLs and freight forwarders gravitate towards these new precincts over time as they become more important to the nation's collective supply chain. It may also mean that rather than shifting, these logistics operators expand their operations, driven by Australia’s growing eCommerce and import volumes.

We predict that market pricing may see a premium being paid for tenant location either within, or very close to IMTs, despite the apparently large amounts of supply on offer. The caveat to this is that tenants and operators will only pay a premium for location if the marginal increase in costs is more than offset by cost efficiencies gained elsewhere in the supply chain, considering accommodation costs make up less than one fifth of the total supply chain outlay.

LOGISTIC COSTS - BREAKDOWN

11% 15% 8% 7% 7% 7%

21% 21% 8%7% 10% 11%

20% 22% 13%12% 15% 15%

49% 47% 23% 26% 29% 31%

0%

20%

40%

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80%

100%

1987 1993 1998 2003 2008 2013e

Administration Inventory Warehousing Transport

Source: A.T. Kearney Logistics costs as percentage of sales

91 Transport Avenue, Netley SA Leased on behalf of Altis Property Partners

Despite the large scale IMT developments that have been taking place, Australia still has an overwhelming reliance on road-to-road transportation and there are still gaps that can be filled by IMTs in the future. For example Sydney’s Eastern Creek has been identified by the NSW Freight Infrastructure Advisory Board (FIAB) as a potential site. The cost of acquiring the privately owned site could be prohibitive and the additional requirement of rail linkage would only increase costs further. However the FIAB has made it clear that “the Eastern Creek site should be reserved for the development of an intermodal terminal to service Western Sydney. Unless the site is protected there is a significant risk that it may be developed in such a way that compromises its use as an intermodal servicing the Western Sydney industrial markets”. With this in mind, we think there will be further large scale IMT developments in the future which will act as a tailwind for industrial property asset values in the longer term.

The road vs rail debate will no doubt continue however we highlight that each has its own merits. More importantly we view both modes of transport being complimentary rather than substitutes. The reality remains that for at least the medium term, Australia will be overwhelmingly reliant on road to satisfy its logistics and supply chain requirements. This is supported by reports from both IBISWorld and Price Waterhouse Coopers which explain that due to the quantum of the challenge the Australian freight industry will face in 2050, it’s essential that a significant wave of investment driven improvements must occur across various types of transport modes. As such, the government will continue to invest in projects that increase the productivity of Australia’s freight networks and this will continue to act as a catalyst for growth in the industrial property sector.


Historical industrial supply vs current intermodal developmentsSydney

Brisbane & Toowoomba

Source: Colliers Edge/GIS




Melbourne

• Intermodals are strategically located along supply chain infrastructure such as dedicated freight lines and arterial roads, their sole purpose decongesting bottlenecks experienced by Australian ports.

• Securing land on the scale required for intermodals along infrastructure within key industrial markets can be costly or

impractical which explains the significance of opportunities currently available within projects such as: ▶ SIMTA’s Moorebank Intermodal Terminal (NSW) – 243 hectares▶ SALTA’s Melbourne Metropolitan Intermodal System (Vic) – over 225 hectares▶ InterlinkSQ’s Toowoomba Intermodal Terminal (Qld) – 200 hectares

• Industrial supply from 2011 to-date has further defined industrial precincts and current enquiry levels suggest intermodals will continue to attract further construction activity along these infrastructure corridors.

• As intermodals become more integrated, its likely major players within the industrial market will gravitate towards them over the coming years given that the industrial sector develops along major infrastructure.

LEGEND


City Centre

New Intermodals

Light Industrial Supply 2011-2016

New/Under Construction Industrial Parks

Major Port

Existing Intermodals


By Sas Liyanage Research Analyst | Research [email protected]

The Sydney industrial and logistics market has been an overarching tale of investment. The combined volumes in the past 24 months were greater than the preceding 48. Since 2014 over $6.6 billion of investment sales have occurred. In the past two years, the unprecedented levels of investment has imposed downward pressure on transaction yields. The average transaction yield in 2015 fell 39bps below its previous low in 2007, sitting at 6.93 per cent. The sharpness of the average transactional yields reflected a weighting toward prime assets exchanged.

SYDNEY INDUSTRIAL MARKET

Source: Colliers Edge/RCA

In similar fashion to 2014, Sydney remained the most popular location for industrial investment in the Asia-Pacific region. Sydney’s preference as an investment destination mirrored the nation’s wider economic conditions.

ASIA-PACIFIC INDUSTRIAL INVESTMENT VOLUME DESTINATION - 12 MONTHS

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This level on demand is unsurprising given Sydney’s function as the engine room for Australia’s new era of services dependent growth. While other states face headwinds caused by the legacy of the mining boom, Sydney’s labour market has vastly improved in midst of a healthy growth rate. Above all, the implicit uplift in Sydney’s industrial properties is underscored by an infrastructure boom. The 2015 State Budget committed $68.6 billion in infrastructure spending in the next four years.

STATE GROWTH INDICATORS – 12 MONTH PERIOD

-6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00%

NSW

VIC

QLD

SA

WA

Economic Growth Employed Persons Retail Turnover

Source: ABS State Final Demand/ABS Retail turnover/Labour Force, Employed Total Seasonally Adjusted (March 16)

Sydney’s industrial assets will remain in high demand given their favourable risk-adjusted-return. The global demand for return in a low yield environment will underpin the pursuit for Sydney’s industrial assets moving forward.

PRIME INDUSTRIAL RETURNS

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

Singapore Hong Kong London(Heathrow)

Vancouver,BC

SanFrancisco

Tokyo Los Angeles Beijing Sydney

Initi

al Y

ield

(%

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SYDNEY MARKET Inside the engine room of growth

First Half 2016




The reduction in inventory brought to market will drive the value placed in multi-asset acquisition. Last year, the $1.073 billion GIC industrial portfolio was amongst the $1.33 billion Industrial portfolio sales occurred nationally. Of these, the Sydney market accounted for $567 million of sales, approximately 44 per cent of national sales by value. And now, it is understood the JP Morgan portfolio is in the final stages of completion; while most recently, eight assets in the Charter Hall Portfolio were acquired by PropertyLink for $135.3 million. This momentum will continue with the Altis portfolio coming to market. This portfolio with a 74 per cent asset allocation in Sydney, will provide an opportunity to achieve scale in an otherwise tightly held market.

Sydney WestThe West’s industrial markets are undergoing a transformation not seen in years. The inner markets remain tight, with withdrawals for alternate use forcing tenants to the North West and Outer West. Meanwhile, the Outer West and North West market have become hubs of activity, with institutions undertaking speculative developments; triggered by a confluence of market confidence and pockets of rental growth. Investment volumes in the West have had eight consecutive years of growth, with volumes last year 545 per cent greater than those in 2008. Indeed, the recent surge in investment activity caused a sharp decline in transaction yields. Since 2013, the average transactional yield fell by 237bps while investment volumes grew at an average of 52.9 per cent per annum.

SYDNEY WEST INVESTMENT

7.28%

6.59%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

$0.0

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2007 2008 2009 2010 2011 2012 2013 2014 2015

Inve

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$ Bi

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Inner West North West Outer West Transaction Yield %


Inner WestThe momentum in investment demand continued through last year, with the availability of stock now all but exhausted. There is a dire shortage of properties for lease, across all sizes. Both rents and capital values have appreciated in line with the perceived value of land. Investment volumes in the past two years have been staggering; nearly greater than the total investment in the prior seven years. For the first time in a long time, the market has experienced rental growth. Prime rents are $140/sqm while secondary rents have climbed to $103/sqm.

Owner occupier demand remained strong. This included businesses experiencing organic growth, with no options for expansion, either. Notwithstanding this, the increased infrastructure development activity has led to a rise in demand from construction related tenants. Moreover, occupiers with locational requirements to facilitate delivery requirements adopted higher rents, in a tighter market.

MFive Industry Park, 1 Moorebank Avenue, Moorebank NSW Valued on behalf of Goodman Funds Management Australia Limited


The Inner West lacks modern, high clearance buildings above

10,000sqm. This demand is unmet, with limited buildings of this

size in the market. And yet, this excess demand will not be serviced

in the near-term, with no new developments anticipated in the

forthcoming two years.

Due to the prevailing value for alternate use, demolition clauses are

now commonplace in lease offers. Additionally, a reduced availability

in vacant spaces has extended the time required to relocate. This

now requires a broader search parameter for suitable locations

also. Where previously finding a suitable location was achieved in a

couple of months, it now takes 6-12 months.

Tenant migration still plays a key theme, with many occupiers being

pushed out by rezoning, conversion and infrastructure development.

For example, Realfoods acquired a site in Villawood and will move

from Tempe following the compulsory acquisition of its premises for

WestConnex.

Outer WestOver $1 billion of investment sales occurred in the Outer West

market last year. This was 52 per cent above investment volumes

in 2014. The market has experienced an average year on year

investment volume growth of 45 per cent since 2011. Furthermore,

the market has experienced an increase in leasing enquiry levels

across all size ranges. The legacy rental growth eventuating from

surge in leasing activity caused by the Anzac Day hailstorms in

2015 has remained. Certain sectors in Western Sydney have

experienced rental growth of up to five per cent. Meanwhile,

the traditional rental gap between the suburbs has narrowed.

Additionally, the market has received displaced tenants from the

Inner West and North industrial markets. Actron Air have purchased

a site at Marsden Park to build their new 25,000sqm head office

and manufacturing facility. Taylor Group is working in partnership

with Actron Air to deliver the facility. For example, Actron Air will be relocating from Bella Vista.

The market has also undergone an increase in demand for land; stemming from owner occupiers, developers and major REITs alike. There is a shortage of land for sales across all size ranges. Because of the shortage in serviced and zoned industrial land, in particular, buyers are now looking toward the Sydney West Priority Corridors. Much of this land, however, is unzoned and un-serviced, with a delivery lead time of two to five years. Land prices being achieved in Sydney West Priority area are now between $160-$180/sqm. Englobo zoned land sits at $200-$260/sqm while zoned, serviced and benched land has increased to $300-$400/sqm.

Although the pre-lease market remains highly competitive with major developers and REITs looking to trigger developments, vacancy and letting up periods have varied depending on the size and quality of the location. Indeed the strong demand for A Grade buildings was evidenced by their quicker take-up. By example, the spec warehouse being developed by Dexus at 1 Litton Close, Greystanes, leased to Reece on a 10 year lease prior to completion of the building. Market pundits will now look to the 21.8 hectare site at the juncture of the M4 and M7 Motorways - Calibre at Eastern Creek; being developed by Mirvac. Construction of the 18,935sqm building has commenced, with completion anticipated in October 2016. The estate has been designed to accommodate Super B Doubles and B Triple access and a warehouse clearance 13.7 metres, the take-up of the site will be a gauge for the continuing demand in well situated A Grade developments.

North WestRents in the North West have climbed in the last year approaching parity with the Outer West market. Rents for larger new buildings are on $100-120/sqm, with $115/sqm considered by many as the

133 Lenore Drive, Erskine Park NSWSold on behalf of Goodman Funds Management Australia Limited



Also, operations in two buildings leased by Novis at 13,000sqm and 14,000sqm will be consolidated back into a 30,000sqm asset. Similarly, Linfox will soon return to its building in Arndell Park, creating 20,000sqm of backfill space. Meanwhile a rationalisation trend has emerged, with larger transport users like DHL adopting campus style developments, with 20,000sqm developments in the same street; deleloped by Goodman. This will potentially draw more occupiers from the North West and Inner West market. Last year DHL moved from a 17,000sqm pharmaceutical grade facility in Arndell Park to the campus style facility in Eastern Creek. Despite in the availability of backfill space, the underlying demand for new developments have remained undettered continue; with institutions like Mirvac, Goodman, Frasers and GPT progressing with speculative developments.

Sydney NorthIn spite the diminishing availability of stock on the market, investment volumes in 2015 were at the highest level since 2007. Over $258 million of investment sales occurred last year. The market remains extremely tight with the scarcity in stock driving rental rates and capital values. Both prime and secondary rents have grown in the past year, with net rents at $200/sqm and $140/sqm respectively. In addition, there is a shortage in stock for lease or acquisition, across all size ranges. The average net rent for leases signed in the year was at $194/sqm.

‘sweet spot’. Pre-leases, however, remain soft due to prevailing level of competition in the market.

The North West market continues to receive displaced tenants. Properties in Castle Hill have received great interest from a number of car yards moving out of areas like Church St in Parramatta. In turn the traditional occupiers, like tech quasi-retailers, have moved from the North West market to farther Western locations. More recently, notable interest has increased from occupiers based in the Northern Beaches. Tenants experiencing growth from areas such as Warriewood are now looking elsewhere due to the higher transportation, outgoing and rental costs. These users are drawn to the North West for its lower costs and similar proximity to the M2 and M7 motorways.

The underlying demand for land from owner occupiers was recently demonstrated by the interest received for the sub-division at 8 Abbott Road in Seven Hills. This was the first supply industrial land for smaller occupiers in almost seven years. The sales achieved a significant rate of $550/sqm, with all the blocks sold off the plan. In this instance small businesses, typically sized at 1,500-5,000sqm, purchased land at 2,500-10,000sqm, at historically high rates.

The market has been active, with larger tenant movements driven by larger buildings becoming available. Re-shuffling in the market will make small pockets of space available. By example, new backfill space will become available once Reckitt Benckiser move between Goodman facilities: from a 20,000sqm to 35,000sqm warehouse. Additional larger sized supply will come online once the restorations to warehouses damaged in last year’s Anzac Day hailstorms are complete. These are scheduled for completion in the next quarter.

39 Herbert Street, St Leonards NSWSold on behalf of Altis Property Partners Pty Ltd


SYDNEY NORTH INDUSTRIAL

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Investment Volumes Prime Net Rent (RHS) Secondary Net Rent (RHS)


The waiting gameThe market has been subdued, with participants sidelined in anticipation of significant rezoning outcomes. Landlords, awaiting the outcome of major planning proposals, remain reluctant to offer leases without demolition clauses. Consequently, these additional clauses have dampened leasing activity, with tenants cautious in signing leases under three years. Major planning proposals such as the Frenchs Forest and North Ryde rezonings are scheduled for finalisation in the forthcoming 18 months. Vacant properties like 45 Waterloo Road, 45 & 50 Epping Road, 271 Lane Cove Road in Macquarie Park, and 5 Skyline Place in Frenchs Forest have prolonged signing lease agreements in lieu of the planning proposal determinations. The market is expected to maintain a tentative tension until these planning outcomes trigger a new wave of activity.

Tenant migrationAlthough the market has received increased enquiry from outside markets like South Sydney, the lack of availability has pushed tenants farther afield: to the upper North markets like Mount Kuring-gai. Users within the market, moreover, are still looking to migrate to lower priced markets. Some have achieved a rental saving of 30-35 per cent. Firms like the Direct Group are still being squeezed out of areas such as Frenchs Forest to the West in search of affordable remedies. Similarly, the supplier of industrial baking ovens, Auto-bake Serpentine, moved from 29-33 King Road in Hornsby to 211 Woodpark Road in Smithfield. Notwithstanding this, the ability for tenants to migrate is bound by the flexibility of their workforce. The majority of occupiers in Mount Kuring-gai, for example, have a labour force domiciled in the central coast. In other cases, organisations require immediate proximately to their clients. In particular: pharmaceutical suppliers in North Ryde. In all the situations users are unable to shift operations elsewhere.

The viability in 3PLHeightened prices have increased the feasibility in outsourcing storage requirements. Companies are now adopting 3PL solutions in a bid to increase efficiencies. Most significantly, it enables the retention of management teams in North while shifting warehousing to lower costs markets. By example, the diversified healthcare company, Alcon-Novartis, undertook a 3PL solution and outsourced its storage while opening a new office in Macquarie Park.

DBL Warehouse Sold on behalf of Joyce Corporations



Alternate EnquiryAn increased enquiry has emerged from the automotive sector, mirroring the rise in domestic car sales. Last year a record breaking 1,155,408 new cars were sold in in Australia, according to the Federal Chamber of Automotive Industries. This was 1.7 per cent greater in the previous record year in 2013. In the North Industrial market, this demand originated from companies looking to service their existing showrooms along the Pacific Highway and Pennant Hills Road, in particular. Outside this, childcare operators looking to cater for an influx in residential development have furthered their pursuit of industrial assets. A warehouse at 45 Epping Road Macquarie Park has received DA approval for conversion.

South SydneyThe market has been the recipient of unprecedented volumes of investment, in the past two years. Average transactions yields in the last year were 16bps tighter than the levels experienced in 2007. Since 2013, the average transaction yield declined by 226bps to 6.79 per cent. Meanwhile, demand from owner occupiers has edged up, with buyers' propensity to spend $3,300-$3,700/sqm, with some cases over $4,000sqm. Overall stock is extremely tight, with limited availability.

SOUTH SYDNEY INDUSTRIAL

6.95%

9.05%

6.79%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

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The leasing market has been limited, restricted by an all-time-low availability of stock. In sizes above 2,000sqm there are currently 16 warehouses available for lease, with seven under offer. According to Colliers’ enquiry statistics the greatest demand is in the 500-800sqm size range. Stock in this range is all but unavailable. Notwithstanding this, much of the existing stock is relatively outdated: with low clearance heights, tight access and in dire need of an overhaul. A diminished stock and inelastic locational requirements have nonetheless driven rental growth in the area. Since mid-2014, prime and secondary grade rents have climbed by 14.19 per cent and 6.71 per cent respectively. Prime net rents are currently sitting at $173/sqm and $123/sqm for secondary assets. Indeed this scarcity has tenants seeking longer lease terms to secure their footprint in the market.

A diminished marketThe impact of withdrawals for conversion to residential, higher and better use commercial, and Westconnex project have continued. A study conducted by Colliers Research revealed that in the last year, a total of 2.02 million square meters was withdrawn from the total 9.6 million square meters in Sydney South. And now, the recently announced metro stations in Waterloo and Marrickville will cause additional withdrawals of stock. Over 15 industrial assets are to be destroyed for the proposed metro stations. This will result in the removal of more industrial floorspace - from an already depleted market. At first count, Waterloo and Marrickville will have a respective industrial floorspace withdrawal of 15,238sqm and 40,672sqm - with more to come.

TOTAL INDUSTRIAL FLOORSPACE LOST

WestConnex

2%

Residential/Mixed Use

19%

Metroline6%

Industrial

73%


The shift outwardPrices for industrial assets have climbed with the market remaining thin. Currently, there is only one investment site for sale, one land opportunity in Denision Street, and no freehold available on the market. The first freehold land sub-division since 2001 has just launched on the corner of Denison Street and Corish Circle, in Hillsdale. The site encompasses 35,740sqm of land. The sale of these lots will be watched with interest as an indication to the increased demand and acceleration of land values in the area. Signs of this were seen last year in the success of the newly developed industrial estates in Port Botany, McCauley Business Park - which 9 Orielton Road, Smeaton Grange

Sold on behalf of IOOF


sold out 6 months prior to practical completion; at rates in excess of $3,600/sqm. This exemplified the outward shift in industrial demand, from inner markets like Alexandria to Botany. Traditionally land in Botany received around $600-650/sqm, significantly less than that in in Alexandria, which expected around $2,500-3,000/sqm. This gap has now narrowed, however. With land availability at a minimal supply, this site expected to fetch around $1,975/sqm. The lots are expected to receive a premium given their pre-approval for warehousing with co-located office space too.

Sydney South WestIn similar fashion to the broader Sydney market, the South West received a steady flow of investment. While volumes were below those experienced in 2014, the limitation of available stock imposed downward pressure on yields. Transactional yields in the market had slid 140bps since 2013, sitting at 6.85 per cent last year. The leasing market has been active, with underlying shortage in A Grade buildings.

SYDNEY SOUTH WEST INDUSTRIAL

7.81%

8.25%8.17%

6.85%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

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The South West market is lifting on the confidence inspired by the Moorebank Intermodal. The project, Australia’s largest intermodal freight precinct, is expected to include a subdivision plan for up to

1,000,000sqm over 243 hectares of land. The precinct is expected to accommodate the extra capacity from a new terminal at Port Botany, to be open in 2017. In addition to the intent to nearly double the freight carried by train to 28 per cent, the market will be the beneficiary of a substantial state infrastructure spend. This includes upgrades to the M5 and Hume Highway. The M5 widening provided improved connections to the South-West with a direct link to the Sydney Port, Sydney Airport and the Sydney CBD. The Hume Highway works improve access to Canberra and Melbourne, moreover.

The South West continued to welcome users seeking refuge from rezoning, high prices, and the lack of availability in the Inner West and Sydney South markets. Capital values in the South West, despite appreciating recently, are substantially below their inner counterparts.

MARKET PRIME GRADE SECONDARY GRADE

South West $1,544 $963

South $2,747 $1,621

Inner West $1,995 $1,170

Source: Colliers Edge (March 2016)

In December, a private occupier came from Kingsgrove to acquire a 7,771sqm warehouse situated at Ashford Avenue in Milperra for $8.6 million. Similarly, a private occupier moved its operations from Roselands to Queens Street in Revesby after purchasing the 5,267sqm asset for $5.8 million.

Outside the steady demand from 3PL users, the market received an influx of interest from construction related occupiers seeking to service high levels of activity in the surrounding area. At the same time, there was interest from materials and manufacturing operators, particularly from aluminium fabrication and concrete production users.

3 Roberts Road, Eastern Creek NSW Valued on behalf of Goodman Property Services (Aust) Pty Limited



MELBOURNE MARKET

First Half 2016


By Anneke Thompson Associate Director | Research [email protected]

Melbourne is home to 4,529,500 people and is Australia’s second largest city by population, and largest industrial market, with 24.5 million sqm of industrial space (>5,000 sqm). Greater Melbourne is also the fastest growing city in Australia, increasing by 91,600 residents in the year to June 2015 – the next fastest growing city was Greater Sydney at 83,300 residents. Melbourne also currently boasts the fastest population growth rate of all capital cities in the country at 2.1 per cent per annum in the year to June 2015. Melbourne has long been home to Australia’s largest port, which last year traded 2.6 million TEUs – the highest on record, and ahead of Sydney which traded just over 2.3 million TEUs. Year on year annual growth in container trade at the Port of Melbourne was 2.18 per cent as at December 2015.

MONTHLY TRADE VOLUMES, AUSTRALIAN PORTS

-

50,000

100,000

150,000

200,000

250,000

300,000

Jun-

05

Dec-

05

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06

Dec-

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Jun-

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Dec-

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Jun-

08

Dec-

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Dec-

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Sydney Melbourne Brisbane Adelaide Perth Source: Colliers Edge/Sydney Ports Corporation/Port of Melbourne Corporation, Port of Brisbane/Flinders Ports/Fremantle Ports

The Melbourne industrial property market continues to see demand grow from logistics and warehousing users, and this is underpinned by the strong performance of the port. Although some older manufacturing industries, such as the clothing/footwear and automotive industries, have been in steady decline for a number of decades now, the logistics sector and emerging manufacturing industries such as food (particularly dairy) production and alternative automotive manufacturing (ATVs,

caravans etc.) are going some way to fill this gap in demand. Overall the Melbourne industrial market will be dominated by the logistics and warehousing sector. The areas that provide affordable, greenfield land for development and are well located to Melbourne’s freeway network are the areas where demand will be concentrated.

Investor appetite for Australian industrial property has continued to intensify over the last few years. As an asset class industrial assets have outperformed all the other asset classes with higher risk adjusted returns. Underpinned by strengthening economic conditions and improving retail trade conditions, this demand is expected to continue. In Melbourne, the current industrial market is characterised by a significant volume of capital searching for investment grade stock, scarcity of quality prime assets, limited (serviced) land supply and a supply pipeline constrained of speculative supply. This demand is driving higher capital values

Melbourne’s port trade and population growth continue to underpin the industrial market

Lot 2, 207 Sunshine Road, TruganinaSold on behalf of Goodman Property Services (Aust) Pty Limited


66 Saintly Drive, Truganina VicValued on behalf of IOOF

and tighter yields. In 2015, a total of 318 industrial and logistics properties worth $6.15 billion were transacted across Australia. This is the largest number of properties (greater than $5 million) ever transacted, although the second largest by value after 2014, when 298 properties transacted for a total sales volume of $6.72 billion. By value, Victoria recorded $1.98 billion of industrial sales covering 100 properties, accounting for 32 per cent of total sales by value and 31 per cent of the number of properties traded.

VICTORIAN INDUSTRIAL SALES VOLUMES

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In March 2014, Colliers International released our inaugural Motor Vehicle White Paper, ‘Which Way Forward’, which outlined the likely impacts on the Victorian industrial market that the shutdown of manufacturing of cars in Australia in 2016 and 2017 will have. The paper explained that approximately 665,000 sqm of industrial space could be vacated by car manufacturers and those firms associated with the manufacturing supply chain in Melbourne and Geelong. We are now less than a year away from the first of the manufacturers (Ford) ceasing production of cars in Australia, so what has the impact been on Melbourne’s industrial market so far?

The good news is that the rate of closure of businesses supplying the automotive industry has so far been minimal, with only 27 closures happening between June 2013 and June 2014, representing only three per cent of the total. Further, the rate of job losses in the supplier industries has been slower than at the vehicle manufacturers themselves, with eight per cent of suppliers jobs lost between June 2012 and June 2013, and only one per cent lost between June 2013 and 2014, versus 10 per cent and 15 per cent respectively for the motor vehicle manufacturers themselves.

CHANGE IN AUSTRALIAN MOTOR VEHICLE EMPLOYMENT

-20%

-15%

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0%

2012-13 2013-14

y-o-

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cha

nge

Motor vehicle manufacturing

Parts, electrical components and other motor vehicle manufacturing

Source: Colliers Edge/ABS8155.0

While we expect that by the end of 2016 – particularly for businesses located in Melbourne’s north – the trickle of manufacturing facilities and excess land that enters the market will become much more profound as some businesses finally cease production, there is good news. A number of parts suppliers seem to be using this time to find ways to diversify their business and particularly their customer base. The huge landholdings of Ford, Toyota and GM Holden will provide opportunities for the institutional development sector, and the imminent sale of GM Holden’s 37 hectares in Port Melbourne will be the first example of this.

City fringeThe City Fringe industrial market has been undergoing a continued transformation for many years now, and the last six months have been no different. The rezoning of much of Port Melbourne (Fishermans Bend) to Capital City Zone has not only changed the usage of sites within that zone, but also in the surrounding areas of Port Melbourne that are still appropriate for industrial use. Showroom/retail occupiers from other City Fringe areas – particularly Richmond, Cremorne and Abbotsford – are now looking at Port Melbourne as a viable alternative location for their businesses, as previously this area was seen as not having


MELBOURNE PRIME GRADE INDUSTRIAL MARKET INDICATORS

REGION AVERAGE NET FACE ($/m² pa)

AVERAGE YIELD

AVERAGE LAND VALUES ($/m²)

H1 2016

H2 2016

H1 2016

H2 2016

H1 2016

H2 2016

City Fringe $180 6.88% $900

North $78 7.38% $258

South East $85 6.88% $280

West $75 6.94% $175

Outer East $83 7.25% $350

COLLIERS INTERNATIONAL RESEARCH FORECASTS



The low interest rate environment continues to attract owner occupiers to the area, and they are in particular taking up some of the secondary stock that is more difficult to lease, given that there is very little differential between rents for prime and secondary grade stock – $62/sqm versus $52/sqm on an effective basis. An example of this was a sale in Barry Road, Campbellfield. An operator with existing presence in the market and who was looking to expand purchased the ex TNT site for $5.55 million.

In the leasing market, most deals continue to happen in the 4,000 sqm to 10,000 sqm range. These occupiers tend to be the smaller, local logistics companies that specialise in food distribution. The larger logistics groups, with the exception of Melbourne Airport and Austrak, still by and large prefer the West industrial market. Rents remain around the $70/sqm to $85/sqm mark on a net face basis for prime grade stock.

Serviced retail strata lots continue to be taken up by local developers, particularly in the Epping area. Land values for these lots have remained steady over the past six months, remaining at an average of $260/sqm. These developers are in turn achieving healthy rates for their developments, with many being sold to self managed super funds (SMSFs) and other smaller investors.

WestFor the first time in a number of years, the West industrial market has seen land values for serviced retail lots increase in value, highlighting the dwindling levels of supply impacting the market. Land values for serviced industrial lots (circa 3,000sqm) have increased from $160/sqm to $175/sqm, representing a nine per cent quarterly increase. Prior to this increase, land values had remained steady for five straight quarters.

The lower levels of supply have been met by continued strong demand, particularly from local builders and small freight companies looking to co-locate in the logistics capital of

enough visibility to the greater Melbourne market. Now many of these businesses have a strong eCommerce function, and thus need more warehousing space and good access to the freeway network and small logistics operators. Port Melbourne meets this criteria.

In Richmond and Abbotsford, the spaces leftover by these departing warehouse/showroom operators in the still to be gentrified areas are being taken up by groups looking to build the next generation of office space – shared, ‘google-type’ campuses. Groups looking to start these businesses are often looking for space that had an ex-warehouse use, and can be turned into something a little different to traditional office space. For this reason, we expect that demand in Port Melbourne will continue to increase, while other city fringe areas will see a reduced demand from industrial occupiers and more demand from these newer quasi-office users.

NorthThe North Industrial market will be the first and one of the most heavily affected markets when the time comes that the motor vehicle manufacturing industry begins its shutdown. Ford will be the first manufacturer to cease production of cars, and this will happen by the end of 2016. However, rather than seeing wholesale closures and vacancies in the market, the North industrial market is witnessing a sharp shift in demand from more traditional manufacturing associated with the motor vehicle industry and towards food export related manufacturing. Proximity to the airport is working heavily in the North industrial market’s favour, as major food manufacturers who have export agreements with Asian markets like to be close to the airport. The Murray Goulburn deal at Austrak’s Somerton Business Park is one such example of expansion into the area by one of Australia’s major food producers.

Warehouse A, 162 Australis Dive, Derrimut (part of the GIC-Frasers Industrial Portfolio) Sold on behalf of GIC and Frasers Property Australia

MELBOURNE PRIME GRADE INDUSTRIAL MARKET INDICATORS


AVERAGE YIELD


H1 2016

H2 2016

H1 2016

H2 2016

H1 2016

H2 2016

City Fringe $180 6.88% $900

North $78 7.38% $258

South East $85 6.88% $280

West $75 6.94% $175

Outer East $83 7.25% $350


Melbourne. For this reason, the major institutions are now looking to replenish their supply pipelines. In February 2016, Colliers International sold 171 Leakes Road, Truganina, an Englobo site on 12.14 hectares for $30/sqm. The site sold to a local private developer, and is currently zoned Urban Growth Zone (UGZ).

Take up of space in the West over 2015 was concentrated in the 5,000 sqm to 10,000 sqm size range. Almost 75 per cent of all industrial leases signed in the West were for warehouses/facilities in this size bracket, and there was a fairly even split in leasing across A and B Grade properties.

There is currently just over 580,000sqm of vacancy across existing stock in the West, across 71 buildings. The majority of the vacancy is within secondary grade buildings, which generally have a longer lease up time than A Grade stock, considering the relative affordability of A Grade rents in the precinct. Underlying demand in the market is positive, with 62 per cent of tenants who are enquiring on space indicating that their reason for moving is that they are expanding. Only 11 per cent of tenants were consolidating two or more existing tenancies. Tenant demand also tended to come from within the precinct, with 67 per cent of tenant enquiry coming from tenants who are already located in the west precinct. The most common locations of tenants who were looking for space in the West who didn’t already reside there are Sydney and Dandenong.

MELBOURNE INDUSTRIAL LAND VALUES BY PRECINCT

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$ /

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North South East West Outer East City Fringe


South & outer east The decline of traditional manufacturing in core industrial precincts has left a gaping hole in the eastern industrial market which is now being exploited by developers. The recent rise of eCommerce businesses and hi tech manufacturers has seen a drive in demand for strata warehouses, as they are affordable, the right size for these organisations and ideally located in key strategic areas which were once heavy industrial precincts. The novelty of ‘man caves’ has also created an opportunity for developers who are seeing individuals - primarily through the use of self managed Super Funds (SMSF) - buy into the market. Record low interest rates are also helping this trend, as the returns on offer are attractive to investors keen to diversify out of equities and residential property.

Average land values in the Outer East industrial market are $350/ sqm, which is $70/sqm more than the South East, and the highest of any industrial precinct in Melbourne, aside from the City Fringe. The Outer East also lacks large greenfield industrial sites, and for this reason many large users who have a particular requirement for hardstand and large amounts of warehousing space have moved to the South East of Melbourne, and even the western markets of Truganina and Derrimut.

The Outer East, however, still has a strong industrial industry, with the largest proportion of the workforce working in the manufacturing sector (13.9 per cent). A further 9.6 per cent of the workforce work in construction, the fourth largest employment industry amongst residents of Knox, after Retail Trade (12.3 per cent) and Health care and social assistance (10.8 per cent). Developers in the area have undertaken to fill a gap in the market, and are developing smaller industrial units in place of the larger industrial occupiers that have vacated.

Developers of these units have immediately seen results, with Industria Knoxfield – developed by Wilmac Properties and Folkestone – selling 75 per cent of Stage one in the three months since the launch of the development. As a result of the strong sales, the developers have fast tracked the second release to satisfy demand.

Strong demand has come from local small to medium sized building and contracting firms, and start-up businesses that focus primarily on eCommerce and on small scale importing and exporting.

In addition to Industria Knoxfield, other developments in the area continue to pop up to capture the strong underlying demand for this product. These developments are located in suburbs such as Oakleigh, Clayton, Rowville and Vermont and range in size from 80sqm to 650sqm.

14 Ordish Road, Dandenong (part of the GIC-Frasers Industrial Portfolio) Sold on behalf of GIC and Frasers Property Australia



By Peter Willington Manager | Research [email protected]

A number of major Australian Corporates have been active in the start of 2016. Looking to take advantage of favourable leasing conditions in order to improve their supply chain and gain efficiencies by centralising into a larger facility. As a result the investment market is particularly strong for prime assets with long term lease expiry profiles or strong leasing potential and quality standard of improvements. The competition for such assets has tightened resulting in tight investment yields to between 6.25 per cent and 7.25 per cent being achieved.

A consequence of significant yield compression in prime grade assets is greater levels of interest for secondary assets. Large volumes of enquiry are being received by private investors and syndicators who require higher returns for their investors than those currently achievable from prime grade assets. From 2014 to 2015 as the investment market for prime industrial assets strengthened as a consequence of record low interest rates, the spread between prime and secondary yields widened to 150 to 200 basis points. Demand for secondary assets improved in late 2015 and is continuing through 2016 to date, resulting in a contraction in the spread between primary and secondary assets to more traditional levels of 100 to 150 basis points.

In contrast to a strong investment market, the industrial leasing market remains subdued as a result of the decline of the manufacturing industry in Australia as well as weaker mining sector that has directly impacted the wider Queensland economy. Early signs in 2016 are pointing toward somewhat of a recovery in occupier markets. Several large corporates have released briefs to the market including Super Amart, Schweppes and Mitre 10 for facilities of 30,000sqm or larger. Similarly Colliers International enquiry data shows a investor appetite has substantially increased for assets between 1,000sqm up to 7,500sqm.

Total sales value and number of sales across the greater Brisbane and Gold Coast Region for 2015 neared the hisorical peak where $1.42 billion transacted in 315 sales. There has been a strong start

to 2016 as a total of six sales worth $151.6 million are pending or settled year to date.

BRISBANE CITY COUNCIL (LGA) INDUSTRIAL SALES ($1- $50 MILLION)

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400

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

Total Number of Sales

Indu

stri

al S

ales

Vol

ume

$1-$5 Million $5-$20 Million $20 Million + Total Number of sales


Institutions accounted for almost 50 per cent of the sales volume in the past 12 months for sales greater than $5 million and continue to drive pressure on market yields. This pressure has resulted in a firming of yields across the wider industrial market throughout the second half of 2015 and 2016 year to date. Investment yields generally firmed in the order of 50 to 100 basis points since the beginning of 2014 and in the near term, capital values are expected to remain stable. In comparison to both Sydney and Melbourne, the south east Queensland industrial market reflects a discount in investment yields of approximately 25 to 75 basis points.

BRISBANE MARKETMarket steady as participants weigh options

First Half 2016


75 Ebbern Street, DarraSold on behalf of private client


At the top end of the secondary grade market yields are expected to compress as the tightness of prime grade stock will lead investors to seek alternative opportunities. Many owners are investing substantial capital in upgrading the physical design of secondary assets in order to attract or retain occupiers in an attempt to capitalise on this trend such as Stockland at Hendra.

Average market rents for prime grade facilities have remained static throughout 2015 and 2016 at approximately $110/sqm. Secondary industrial facilities have been relatively stable remaining at approximately $85/sqm since 2012. Whilst net face rents have remained stable for both prime and secondary assets, incentives offered to the market have generally increased. Incentives for prime assets have increased to an average of approximately 10 per cent, similarly secondary assets have increased to an average of above 15 per cent.

Occupier demand remains strong for purpose built modern buildings that are located in areas that are well serviced by transport networks. A key feature of the current market is the strong demand for good quality investment property that benefits from strong tenant covenant, long term WALE, good location and functional buildings. The lack of available investment opportunities has seen the market broaden its focus with recent strong interest in good quality assets with shorter WALE’s with buyers more receptive to taking leasing risk. The current historically low official interest rate environment is also stimulating demand by both investors and owner occupiers.

Australia TradeCoast Expansion leading enquiryThe ATC continues to be dominated by transport and logistics operators as the proximity to the expanding airport and port continues to attract a rental premium. There was steady demand for industrial space over the half in the area supported by sustained growth in both import and export container movements through the port and air freight. Despite overall subdued economic conditions, the positive outlook for trade related activities led to Colliers International Enquiry Data showing that 44.4 per cent of all leasing enquiry received in the ATC was for expansion space.

285 Lavarack Avenue, Pinkenba Sold on behalf of OneSteel

PURPOSE OF LEASE ENQUIRY SECOND HALF 2015-2016 YTD

44.4%

17.3%

7.4%

6.2%

4.9%

19.8%

Expansion Space

Relocation

Lease Expiring

Consolidation

Downsizing

Not Disclosed


The largest deal in the period was Bevchain’s precommitment for a 35,717 sqm facility in the airport precinct as a consolidation of a number of smaller properties throughout the area. We expect to see additional consolidation and expansion leases throughout 2016.

Throughout the half face rents are expected to remain stable at around $130/sqm for prime and $85/sqm for secondary, however, it is expected that incentives will increase as particularly large occupiers leverage the current soft market conditions to expand and consolidate space.

Investment activityInvestor appetite for prime assets with long term WALEs is expected to remain strong, only limited by the dearth of stock brought to market. The recent sale of 1-5 Bishop Drive at the Port of Brisbane reflects the demand for prime assets. The $63 million sale is the largest in South East Queensland year to date and transacted at an equivalent reversionary yield of 8.75 per cent.

The Bishop Street deal is the highlight of a slow start to the year for transaction values as virtually no prime stock has been brought to market.

As investment opportunities remain constrained, many speculative investors are moving up the risk curve and investing in more complicated assets. As such it is expected that both the Brisbane


BRISBANE PRIME GRADE INDUSTRIAL MARKET INDICATORS


AVERAGE YIELD


H1 2016

H2 2016

H1 2016

H2 2016

H1 2016

H2 2016

Australia TradeCoast $112 6.90% $275

North $107 7.50% $238

South $100 7.00% $225

South west $100 7.00% $225

Yatala $92 7.25% $200




new tenants to commit to the area and develop a hub for like uses to reinvigorate the north market into a specialty hub.

While no major transactions have been recorded year to date, several assets are coming to market with strong lease covenants. These assets are expected to transact well as investors find long term annuity type assets particularly attractive.

The appetite for larger scale development has increased significantly after a stall in recent years following the Global Financial Crisis. As the prevailing economic climate improves, new supply is expected to increase based on the development pipeline. Sites which are development ready, having been cleared and levelled, are likely to experience greater demand which the North precinct is well placed to capitalise on.

SouthInvestment activity slows while buyers catch their breathAfter a strong second half of 2015, there has been limited transactions in the South during the first half of 2016. Constrained by a lack of stock brought to market, investors have been active in the $5 million - $15 million market. Investment sales in the precinct were underpinned in 2015 by a small number of portfolio sales, which has led participants in the market to re-evaluate the input in pricing models. As such competition for good assets is expected to be intense when they are brought to market.

Development applications show confidence in marketInstitutional demand during 2015 was underpinned by opportunistic acquisition of large tracts of allocated industrial land. Key players in the market were GPT that acquired 20 hectares in Berrinbar and Dexus who purchased 4.8 hectares Larapinta as reported last half. These developments have now progressed to the application phase; and reflect the leasing dynamics of the market. A range of configurations are proposed for both developments including large format warehouses and smaller mixed-industry and business accommodation in order to appeal to the largest market.

Mixed leasing demand continuesOccupiers continue to leverage the soft market conditions and are currently evaluating all available options prior to executing a lease. As a result the lead times for occupiers have decreased knowing that if required the existing owner will allow lease extensions if required. Colliers International is currently negotiating a number of lease deals, however, they are progressing slowly as occupiers are carefully weighing decisions prior to acting.

Airport and Brisbane Port surplus land offerings will see increased interest despite the traditional aversion to leasehold property in Queensland.

Properties in the ATC continue to remain tightly held with assets providing strong underlying fundamentals in particular demand for both investors and owner occupiers.

NorthLarge tracts of allocated land providing options for expansion and consolidation Located in close proximity to the trade facilities in the ATC, the large tracts of allocated industrial land in the northern market are gaining traction with large occupiers that have the luxury of long lead times. Tempted by the comparatively attractive rental rates when compared to the ATC and good access to transport networks, Aldi was the first of many to have taken advantage of the soft market conditions to have a purpose built facility constructed in the area. Aldi took occupation of the 50,000sqm facility in December of last year.

Positioning of assets amongst competition now key for vendorsThe large institutional owners of large format estates within the north region are repositioning existing assets in the face of large tracts of land allocated for industrial uses. The traditional north precinct is currently subject to a large refurbishment and repositioning exercise to provided occupiers with functional facilities at reasonable prices. The strategy is geared toward retaining existing tenants and gaining

102 Trade Street, LyttonSold on behalf of Frasers Property


South West Investment options constrainedProperties continue to be tightly held in the south-west precinct as current owners see substantial upside in the expected population growth and infrastructure investment in the region. Of the few properties brought to market, the highlight was the Cache REIT’s purchase of 203 Viking Drive in late 2015 for $27 million reflecting an equivalent reversionary yield of 6.1 per cent a strong indication of the demand for prime assets in the sought after area.

Leasing activity expected to continue Current offerings in a number of large master planned industrial facilities, developed by a number of the industry’s big names are expected to secure the bulk of leasing and investment activity throughout 2016. Developed to capitalise on the theme of consolidation that is recurrent through the Brisbane industrial market at present. These estates offer a number of different industrial configurations in an attempt to capture all range of requirements in the region.

The largest deal year to date was the 32,000sqm deal to Shenker group in Wacol where the deciding factors were proximity to DB Shenker employee pools, arterial roads and intermodal facilities to heavy rail. This deal was a relocation for Shenker from the ATC, reflecting the appetite for occupiers to look across all Brisbane markets for the best facility and or deal.

Constrained by the large tracts of allocated industrial land in the region, rentals have remained static year to date, however, there is

141 Boundary Road, OxleySold on behalf of a private investor

limited scope for an increase in incentives, and however, it is likely that many of these deals will be negotiated below the bottom line.

Yatala Enterprise Area Recovery from stallFollowing a five year stall in the market, the Yatala Enterprise Area is showing signs of activity led by a number of new entrants and along with the execution of a number of sale and lease back type transactions. The lease of 30,000sqm in the precinct by OI Glass was the first of a number of requirements that have emerged in the area with Colliers International executing three additional lease deals year to date for a total of 45,000sqm. A number of major industry players retaining substantial land holdings in the area, it is expected that space will be aggressively marketed and the area will gain further traction.

Key assets snapped up quicklyA number of key assets with long term WALEs and good tenant covenants have transacted in the past 12 months. Led by the Guardian AIT acquisition of 30 Union Circuit at an equivalent reversionary yield of just under eight per cent being the highlight of recent months. The 17,100sqm site has 7,500sqm of GLA split between office and industrial accommodation. The property was sold fully leased to Vulcan Steel with a four year term with a ten year option.



PERTH MARKET

First Half 2016


By Misha White Manager | Research [email protected]

Due to the contraction of the mining resources sector, continuing moderation in economic growth and slowing population growth, the Perth industrial market continues to remain subdued, for both leasing and sales activity.

As the West Australian economy adjusts and transitions away from resource based industries, Perth’s industrial leasing market remains weak, with a vacancy rate of 6.5 per cent for buildings with 5,000sqm or more being experienced across the metropolitan area.

However, vacancy within the Perth industrial market is variable, and is dependent on the location, size and quality of the industrial building. Much of the vacant stock on the market is older and of a lower quality which, in the current climate with so many options available, no longer offers comparative value for money. On the other hand, modern high quality facilities are still desirable and in relatively short supply.

There is also a greater proportion of vacant space amongst smaller sized stock sub 5,000sqm. Larger buildings, particularly those over 10,000sqm, traditionally experience lower levels of vacancy, with fewer choices available.

In recent times some property owners with vacant assets have lowered their expectations, and warehouse rents have continued to trend downwards in line with the limited demand.

Colliers International expects that prime warehouse rents are likely to bottom out in 2016, with the market likely to then stabilise in the short-term. Secondary space rents may continue to experience some more downward pressure due to the larger amount of lower quality stock available in the market.

It is possible that the moderation in the leasing market may provide the impetus to upgrade older and lower quality stock to increase both the level of demand and the achievable rents.

Investment sales remain strong, despite the challenging economic conditions in Western Australia. Modern industrial facilities that are well leased and well located with strong capital flows are highly desirable and sought by buyers. This robust demand, competition and lack of suitable supply is causing some yield compression.

Unlike many of the other major Australian capitals, the industrial market in Perth is dominated by local high net worth individuals, with long term hold strategies that are not perturbed by the cyclical fluctuations of the market.

Soft sales activity is more evident amongst smaller, dated and unleased stock. Leased assets, despite their condition, will experience moderate to robust demand as investors seek cash-flow security.

With the present uncertainty in economic conditions and an excess of leasehold options available, owner occupiers have abandoned the market for the time being, and are waiting to see what the future holds.

Land values have been in a gradual decline since early 2014 and have moderated further in recent quarters. Fringe land values for the March 2016 quarter ranged from $150/sqm to $385/sqm, whilst core precincts ranged from $325/sqm to $525/sqm.

Robust investment sales continue despite challenging conditions

60-62 Bannister Road, Canning ValeSold on behalf of private owner


Although industrial land demand is currently soft, a limited supply of developable land in well-serviced, well-positioned locations has contributed to weak transactional activity and land values. Vacant land in central blue-chip precincts remains in demand by both investor and owner occupiers.

As Perth tends to be dominated by small businesses, and with business confidence in the doldrums, smaller lots have experienced a greater degree of moderation in value. Larger lots on the other hand, in central locations have generally held their value, given these are in limited supply. With the supply of new builtform stock moderating since 2014 and with a limited supply of larger industrial product forecast for 2016 and 2017, larger lots are likely to remain sought after.

Unlike other asset classes the requirements of the industrial end-user may be entirely variable, based on the type of business that they are engaged in. To this end, finding buildings that can accommodate specialised operational needs can at times be challenging. Therefore land can represent the most suitable option, rather than acquiring existing assets which require amalgamation, demolition or retro-fitting.

With a lack of suitably sized stock, design-and-construct options can be a more viable option for many businesses. This is particularly true for larger industrial operations, where it makes sound financial sense to reduce capital outlay, diverting those funds into further business development.

In terms of development ready land available for industrial use, there can often be a mismatch of the requirements by potential buyers and tenants to what is available in the market, particularly in times of constrained supply or high demand. In these instances potential buyers may be forced to purchase what is on offer, as their preferred lot size or location is unavailable. This is more apparent for those lot sizes which rarely come to market, such as large lots (1.0 ha to 10.0 ha plus).

It was previously noted in the Economic and Employment Lands Strategy released in 2012 that with the increase of transport and logistic oriented industry activities, lot sizes of 4,000sqm and above were likely to increase in demand.

Over the last 15 years, sales of vacant industrial land within the Perth metropolitan area have been dominated by lots between 1,000-3,000sqm. These have made up 70 per cent of all lots supplied to the market, whereas this size cohort only represents 53 per cent of existing industrial lots within the metropolitan area as noted by the Department of Planning’s Economic Employment Land Monitor, indicating an ongoing lack of larger industrial land parcels being provided to market. Many industrial operators often occupy or amalgamate adjacent properties in order to accommodate their activities.

To this end a two tier market may emerge by late 2017, where users in demand of modern, well located, medium to large sized facilities may have limited options by 2017. For some groups, this may already be the case in late 2016.

In general, few large scale industrial development opportunities exist within the central areas of Perth with most coming from the redevelopment and reconfiguration of existing larger sites with dated improvements.

Previous amendments to the Metropolitan Region Scheme have recently allowed the rezoning of Rural land to Industrial within the Hazelmere Enterprise Area. To date approximately 210 hectares of land has been proposed for local scheme amendment to rezone to Industrial, with a further 40 hectares to be rezoned to Special Uses. Of this, 32 hectares was recently approved for rezoning to Industrial, offering opportunities for larger lots in a central location when market demand recovers.

SouthMajor asset sales still strongPerth’s South industrial region has seen the highest volume of major transactions in the six months to the end of March 2016. Ten major assets (over $3 million) changed hands, with an aggregate value of $102.86 million.

Recent major transactions to occur included the purchase of an 87.2 ha landholding previously utilised as a quarry from Cockburn Cement in Henderson by LandCorp for $30.8 million and the Investec Australia purchase of 54 Miguel Road, Bibra Lake for $28.6 million. The Stockyards Industrial Estate in Bushmead Road, Hazelmere, featuring purpose built facilities for four occupiers was also recently sold by Goodman to Charter Hall for $240 million. The latest transactions (over $3 million) to occur in the South early 2016 were; 160 Pinjarra Road, Mandurah for $4.4 million; 215 Bannister Road, Canning Vale for $9.5 million and 23 Office Road, Kwinana for $6.05 million.

There were nine vacant lot transactions recorded in the South for the last six months to March 2016 totalling $10.4 million. Colliers International estimates the average vacant land rate for the South region to range between $375/sqm and $450/sqm in core industrial precincts such as Canning Vale.

300-310 Treasure Road, WelshpoolLeased to AAAC Towing



Prime grade rents in the South region have been stable over recent quarters and are currently ranging between $75/sqm to $95/sqm, with secondary space averaging $70/sqm.

The vacancy rate for the Southern sector was 10.3 per cent for the March 2016 quarter, with a vast proportion of this available space coming from Canning Vale. This was up from a vacancy rate of eight per cent in March 2015.

NorthVacancy rate declinedAlthough there have been over 60 transactions have been recorded so far in the North for the six months to March 2016, preliminary results show that there was only one major transaction over $3 million. This was the sale of 376 Scarborough Beach Road in Osborne Park for $3.57 million. This is well below the 13 high value transactions ($3 million plus) recorded in the six months previous, for a total of $203.1 million.

Colliers International estimates that rents for prime warehouses have remained steady in the North region over recent quarters, to range between $80/sqm and $100/sqm in the March 2016 quarter. Similarly secondary rents have remained between $70/sqm and $85/sqm. Yields have tightened with prime assets averaging yields of seven per cent.

Estimated land values in the North region continued to remain stable for the March 2016 quarter ranging between $350/sqm and $525/sqm.

In the March 2016 quarter, the North sector had the lowest amount of vacant space (over 2,000sqm) available, with a vacancy rate

of 9.2 per cent. Most of this vacant space was in Landsdale/Wangara, Osbourne Park and Malaga. The vacancy rate has in fact declined from a year ago, from an estimated 10.6 per cent in the March 2015 quarter.

EastLand in short supply

There were eight major transactions in the East region in the six months to the end of March 2016 amounting to $53.8 million. This was higher than the previous six months, when only 5 transactions were recorded.

Major transactions in the last six months included the purchase of Lot 153 Talbot Road, Hazelmere by the Perpetual Corporate Trust for $17.5 million; 3 Ballantyne Road, Kewdale for $8.2 million and 34 Jackson Street, Bayswater for $6.68 million.

A number of major leasing transactions also occurred within the East region over that same time. This included 300-310 Treasure Road, Welshpool leased by Burse Pty Ltd with over 10,000 sqm of warehouse and 14,500 sqm of hard stand; along with a 2.5 hectare site at 415 Dundas Road, Forrestfield.

Vacant land transactions in the East region are limited by a lack of available land in the region, as precincts here are well established. Just one lot has been recorded as changing hands in the last six months with a total value of $2.47 million at 18-20 Riversdale Road, Welshpool.

Colliers International estimate land values in the East region to be between $325/sqm and $500/sqm in the March 2016 quarter. This is a 12 per cent decrease from value six months ago.

The East region recorded the lowest vacancy rate (over 2,000sqm) of all the sectors in the March 2016 quarter at 7.6 per cent. This is up from 6.6 per cent recorded in the March quarter 2015. Given the number of industrial precincts in the area, the East region also recorded the greatest amount of vacant space available across the Metro area. The majority of which was within the Kewdale/Welshpool precinct. There is a high proportion of low grade industrial space, with very little A grade space available for lease in this region.

Rents achievable for prime warehouse space in the East region are the highest of all the regions, sitting between $85/sqm to $105/sqm, whilst secondary space is averaging $75/sqm. With investment grade assets in short supply, prime yields were averaging 6.88 per cent.

415 Dundas Road, Forrestfield Leased to Century West Transport


ADELAIDE MARKET

First Half 2016


Submarine contract awarded within South AustraliaBy Kate Gray Associate Director | Research [email protected]

The announcement of the contract to build the new submarine fleet with the French bid, has assured that the bulk of the building of the submarines will occur at Osborne. This $50 billion project is to deliver 12 new submarines which is likely to secure the 1,100 employees at Australian Submarine Corporation (ASC), but is also likely to create a further 1,700 jobs in the supply chain. The ASC employees 2,600 employees which makes it the largest naval ship building capability in Australia. As part of announcement it Federal government have announced further support for Australian steel, which is aimed at supporting Arrium steel in Whyalla, which went into administration in April. This announcement will support further property development in the Osbourne area and possibly further afield depending on the awarding of some of the subcontracts related to the build.

Enquiry in the Adelaide industrial leasing market has seen a significant jump over February and March with the march seeing a 26 per cent increase in enquiry over March 2015. The most significant jump has been in the below 1,000sqm, but the bulk of enquiry which the Colliers Industrial teams see are above 2,000sqm. The industries which are the most active are retail trade and manufacturing. Tenants are looking to relocate to new premises as they are seeing opportunities to move to better quality tenancies with limited increases in rents. Given the large jump in enquiry we expect that this will result in increased leasing activity during 2016.

The Adelaide industrial market has seen vacancy fall in the last six months from 6.4 per cent in September 2015 to 4.9 per cent in March 2016. This vacancy rate looks at buildings over 5,000sqm and gives a good indication as to the performance of the broader industrial market. In particular the Outer North market has seen vacancy fall dramatically over the least six months. This is despite the fact that Holden and the automotive industry is due to shut down in 2017. Given that there has been around two years between the announcement and the closure this has given both owners and tenants time to adapt. Tenants have time to allow them to broaden their business model into new markets so that they are able to continue operations. From an owner perspective, some have taken the opportunity to sell, with purchaser able to buy at below replacement value.

There are some lessons which can be learnt from the closure of Mitsubishi at Tonsley in 2008. There are however some significant differences when comparing the closure of Mitsubishi to the Holden closure. The main differences are the scale of the property, the notice of the timing of the shut down and that there is a complete exit of the industry with the remaining car manufacturers closing around the same time. The scale of the assets are significantly different with Holden occupying over 280,000sqm with Mitsubishi being 80,000sqm. There are however some significant differences between the two closures. When Mitsubishi exited Adelaide, the announcement of the closure

91 Transport Avenue, Netley SA Leased on behalf of Tonic Pty Ltd



Aldi distribution centre completedThe Aldi Distribution centre opened in early 2016. This $70 million project is a 30,000sqm distribution centre which is due for completion in early 2016. This distribution centre will service a network of new Aldi retail stores in Adelaide with several stores already opened. Aldi currently have plans for 19 stores across metropolitan Adelaide with plans are to open between 40-50 stores in the South Australian market over the longer term.

Gillman land due to settle this yearAfter a protracted dispute over the Gillman land sale, the first portion of the land sale of 145 hectares is due to settle at the end of the year. The purchaser which is Adelaide Capital Partners is due to settle this portion for $45 million. This is one of the largest industrial land releases seen in the South Australian market, and is attracting strong enquiry. We would therefore expect that there is will be several large pre commitments.

Adelaide SouthTonsleyLate in 2015 the State Government committed $12 million for the continued construction of the Tonsley site. This includes a civil works package and the development of ‘pods’ under the main assembly roof of the Tonsley. This project has commenced the next phase of construction with Micro-x committing to space in a pod. We understand there are also several new deals in the pipeline for POD space under the main assembly building. There has been a further block of land sold on the Tonsley site and interest in several other parcels which are expected to transact

and the closure date were two months apart. This meant the ability to adapt was very limited and there was limited time to investigate options for the redevelopment if the site. Mitsubishi closed in 2008 and the acquisition, planning and redevelopment to Tonsley has taken a significant amount of time. The first tenant on the site which was TAFE opened in January 2014. However given the long shut down period, there is time for all major players time to adapt to the new conditions. Both State and Federal Governments have been engaged in the process and have put in place significant training and career support for the Holden workers to transition to new careers. From a property perspective, there has been time for both tenants and owners to adapt therefore the impact on the property market has been far less severe than initially expected. There are still no announcements as to what the intention for the Holden site are, although there have been several options mooted.

There have been no sales over $5 million recorded during the first quarter of 2016. Sales volumes for industrial property over $5 million during 2015 were above average but below the record year recorded in 2014. Total volume in 2015 was $207 million compared to $330 million in 2014. Prime grade yields in the Outer North and West have remained stable with 25 basis point tightening in the Inner North market. Prime quality assets are still in demand but we expected that there is only limited scope for further tightening in yields over the coming 12 months.

Inner north/ outer northOuter North see vacancy fallVacancy in the Outer North market has begun to tighten over the last six months which has reversed the trend of consistent increases since the first vacancy survey in March 2013. The current vacancy rate in this market was recorded at 2.5 per cent which has fallen from 19.9 per cent in September. Although the closure of Holden is still looming, the Outer North market has started to adapt to new uses. The Outer North region is reasonably recently developed and therefore offers prime grade buildings. Purchasers have therefore taken the opportunity to buy into the precinct below replacement value. This has generated sales activity in this precinct, although several of the sales have fallen below the $5 million threshold. From a tenant’s point of view, the Outer North are offering very competitive rents for a prime grade building and therefore are an attractive option. Prime rents have fallen by 15.8 per cent over the last two years, but rents have remained stable over the last three quarters. Invectives for prime grade assets have started to contract and current range between 10-15 per cent. Despite this there are still some head winds in this precinct with the closure of Holden due in 2017. This is the largest tenant in the area, and although there have been some plans mooted to continue operations at the site, nothing have eventuated as yet.

22-24 Tikalara Street, Regency Park Leased on behalf of R McMillan Properties Pty Ltd


in the next six months. The Core Drills Library was opened by the Premier in February which is the centre of the resources investment in the Tonsley site. Further investment has been made in the public realm with the completion of the Western Plaza which connects to Main assembly building with the carpark and the train station. The Tonsley precinct is being developed by Renewal SA and is an advanced manufacturing hub which will employ 6,300 people and educate 8,500 students per year. CIC Australia will develop the residential component of the Tonsley project. This is expected to house 1,200 people once the project is completed.

The next stages of the north south corridorThe next stage of the upgrade of the north south corridor has commenced. The Torrens to Torrens project addresses the 3.7 kilometre section of South Road between the Torrens River and Torrens River. The scope of this project includes the lowering of a 2.5 kilometre section of road, an overpass of the Outer Harbor line and upgrades to the Torrens Road, Hawker Street, Hurtle Street, Port Road, Grange Road/Manton Street and Ashwin Parade/West Thebarton Road intersections. This road will have no traffic lights and will see three lanes run in both directions and is due to complete in 2018. The other part of the North South corridor upgrade is the Darlington upgrade project which will address the section of Main South Road between the Southern Expressway and Ayliffes Road. Property acquisition and demolition has commenced for the commencement of road works. The State and Federal governments recently announced joint funding of $985 million of for the Northern Connector project. This will join the Northern Expressway, Port Wakefield Road, South Road Expressway and the Port River expressway and will bypass six busy intersections along South Road.

Adelaide WestWest sales activityThe last quarter of 2015 saw several sales settle with one of the largest being the Metcash site in Kidman Park. This site which has a lease in place to Metcash with a 4.5 year WALE at time of sale. This site however is 119,171 sqm is an ideal longer term development site. This property located at 404-450 Findon Road, Kidman Park (58,794 sqm) was sold by Cheap as Chips to Cache Logistics trust for $57.3 million with a yield of 8.9 per cent.

ADELAIDE INDUSTRIAL SALES VOLUMES

-

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ions


ADELAIDE INDUSTRIAL VACANCY

0% 5% 10% 15% 20% 25%

Total Market

Outer North

Inner North

West

South

Mar-16 Sep-15


22-24 Furness Avenue, EdwardstownLeased on behalf of John Weir & Deborah Ann Weir

ADELAIDE PRIME GRADE INDUSTRIAL MARKET INDICATORS


AVERAGE YIELD


H1 2016

H2 2016

H1 2016

H2 2016

H1 2016

H2 2016

Outer north $80 8.25% $70

Inner north $110 7.75% $210

West $140 7.25% $425

Inner south $115 7.75% $425

Outer south $78 9.25% $80





109 Stenhouse Drive, Cameron ParkSold on behalf of Pipeclay Investments

ADELAIDE PRIME GRADE INDUSTRIAL MARKET INDICATORS


AVERAGE YIELD


H1 2016

H2 2016

H1 2016

H2 2016

H1 2016

H2 2016

Outer north $80 8.25% $70

Inner north $110 7.75% $210

West $140 7.25% $425

Inner south $115 7.75% $425

Outer south $78 9.25% $80

NEWCASTLE MARKETRental rates steadyBy Mark Yazbeck Research Analyst | Research [email protected]

• Rental rates steady and in some instances increased from the fourth quarter in 2015 to the first quarter in 2016

• Warehouse leasing activity dominates the market, however demand for workshops still remains steady

• Demand for large, specialised engineering workshops within Tomago, Rutherford, Singleton and Muswellbrook has eased. However, demand for small to medium sized workshops from mining services related industries has remained steady, and still comprises a large proportion of demand within most of the industrial estates within the region

• Close proximity to major arterial routes, rail and port facilities are key drivers for companies to base their operations in the Newcastle region

Warehouse and workshops rents improved slightly during the second half of 2015, with rental rates ranging from $85 to $110. Warehouse rents continue to comprise the majority of vacant space within prime industrial locations such as Beresfield, Thornton, Mayfield and industrial suburbs surrounding the Port of Newcastle.

Rental rates are predicted to improve during 2016 due to a recovering economy and the increasing presence of owner occupiers absorbing vacant stock.

NEWCASTLE INDUSTRIAL RENTS - WORKSHOP VS WAREHOUSE RATES

$80 $81

$80 $78

$80

$85 $88

$90 $90

$93$95

$100$98

$90$88

$90

$50

$60

$70

$80

$90

$100

$110

2009 2010 2011 2012 2013 2014 2015 2016

Rate

per

m²

Warehouse $/m² Workshop $/m²

Source: Colliers Edge/Port of Newcastle

IncentivesIncentives within the Newcastle market are typically associated with the leasing of larger facilities for lease terms greater than three years and range between 8 per cent to 10 per cent of the lease term certain.

The majority of lease deals negotiated during the second half of 2015 in prime industrial areas have featured incentives less than this, with most incentives being experienced for older industrial facilities in secondary and fringe industrial locations.

Industrial enquiryFourth quarter 2015 to first quarter 2016 The current low interest rate environment, a strengthening local economy and stable industrial land values have contributed towards increased enquiry from owner occupiers within the

First Half 2016



Newcastle industrial market during the second half of 2015 (approximately 10 per cent from the third quarter 2015).

This increased demand from owner occupiers has resulted in an uplift in values for properties sold with vacant possession. For instance, Colliers International has witnessed properties being listed for lease receiving strong demand from owner occupiers, with circa 60 per cent to 70 per cent of properties listed for lease being sold.

Whilst tenants comprised the majority of enquiry from the first quarter in 2015 to the first quarter in 2016, Colliers International expects owner occupiers to dominate throughout 2016. The ratio of tenant to owner occupier enquiry is highlighted in the following graph.

TENANT VS OWNER OCCUPIER ENQUIRY

56%

44%Owner Occupiers

Tenants


Investment sales transactionsThe demand in the investment market for high quality industrial assets in Newcastle continues to firm. Small to medium sized facilities are achieving yields ranging from 6.90 per cent for purpose built facilities in prime locations with strong lease covenants, to 9.95 per cent for older facilities exposed to re-letting risk.

Recent notable industrial sales indicate strong demand exists from high net worth investors and self managed funds. The main attributes these investors are looking for in the Newcastle market include location, covenant strength, lease term/WALE, lease provisions and building age/capital expenditure requirements. Recent transactions within the Newcastle region from the fourth quarter in 2015 to the first quarter in 2016 are listed on Table 1.1

Owner occupier sales transactionsIncreased demand from owner occupiers capitalising on the historically low interest rates and improving business confidence, has resulted in uplift in values for properties sold with vacant possession.

The most prevalent has occurred within premium industrial locations such as Beresfield, Cardiff, Thornton, Warabrook and inner city locations.

A sample of vacant possession properties transacted from the fourth quarter in 2015 to the first quarter in 2016 are detailed on Table 1.2

ADDRESS SALE PRICE DATE LETTABLE AREA (SQM) PASSING YIELD WALE (YEARS)

91 Glenwood Drive, Thornton $1,200,000 Oct 2015 857 9.05% 1.35

55-57 Broadmeadow Road, Broadmeadow $2,260,000 Nov 2015 1,517 9.95% 1.59

115 Munibung Road, Cardiff $2,900,000 Dec 2015 1,531 6.90% 10.00

109 Stenhouse Drive, Cameron Park $4,780,000 Jun 2015 1,848 9.59% 4.58

51 Industrial Drive, Mayfield West $31,000,000 Jun 2015 122,685 9.46% 9.20

TABLE 1.1

TABLE 1.2

ADDRESS SALE PRICE DATE SITE AREA (SQM) INITIAL YIELD CAPITAL VALUE RATE ($/SQM)

25 Metro Court, Gateshead $1,200,000 Feb 2016 3,270 1,189 $1,009

11-13 Callistemon Close, Warabrook $1,620,000 Sep 2015 5,848 2,297 $705

41 & 43 Mustang Drive, Rutherford * $2,700,000 Dec 2015 7,875 2,388 $1,131

Lots 199 & 395 Metford Road, Metford $3,400,000 Sep 2015 12,527 4,578 $743

18 Burnet Road, Warnervale Confidential Dec 2015 103,200 20,367 Confidential

*Industrial workshop facility.



Industrial land sales transactionsDemand for industrial land has improved during the second half of 2015 and the start of 2016, fuelled primarily by owner occupiers capitalising on historically low interest rates, together with speculative investors looking at site specifics and value for money offerings.

Serviced industrial land supply is limited to around six key industrial precincts, with Beresfield, Cardiff and Mayfield West experiencing the strongest demand.

Cardiff Central Industrial Estate has sold out, with lot sizes within the estate ranging from 2,552 sqm to 13,080 sqm, with an average of 4,221 sqm. Land sale rates range from $73/sqm to $159/sqm with an average of $109/sqm over the net useable site area. Further evidence of the increased demand for land is the re-sale of Lot 4 within the estate, achieving a 23 per cent price increase from September 2013 to March 2016.

Steel River Industrial Estate at Mayfield West has witnessed an increase in land values from $100/sqm up to $135/sqm, with a corner 13,200 sqm site near the entry to the estate achieving $174/sqm in July 2015.

Freeway North and Freeway South Industrial estates at Beresfield continue to perform strongly. The release of Stage 3 and Stage 4 has been well received by the market within Freeway North Precinct, whilst only two lots remain within Freeway South Precinct.

The outlook for the Newcastle industrial market remains strong and we expect demand for serviced industrial land to continue to improve.

64 Gardiner Street, RutherfordLeased on behalf of Nepean Mining

Cardiff Central Industrial Estate – 100% SoldProject Marketing on behalf of Ferrier Hodgson


NEW ZEALAND MARKETKiwis love industrial property

First Half 2016


By Chris Dibble Director | Research & Consulting [email protected]

New Zealand’s love affair with the industrial sector continues. Almost half of all commercial property sales turnover was in the industrial sector for 2015, aggregating to $2.8 billion worth of transactions. High volumes of industrial property trading is a common occurrence in New Zealand, but the confidence investors have given the sector recently has increased markedly, encouraged by strong property fundamentals from an expanding economy. The latest Colliers International surveys in New Zealand and globally attest to the sector’s performance.

Investor confidence soarsOptimists outweigh pessimists significantly in the industrial sector according to the latest Colliers International survey for the March 2016 quarter. Investors foresee the industrial sector providing key investment features of rising rents, low vacancy and firming yields.

This hasn’t always been the case, with a significant lift in the sector’s enthusiasm since late 2008 when our survey began. Auckland tops the main centres for confidence, with a significant turnaround as shown in the accompanying chart. Wellington has experienced a rise in the number of optimists to an all-time high of a net positive 25 per cent. Christchurch, which showed a significant turnaround in late 2008, also has a net positive result of 25 per cent, however has come off recent highs as earthquake rebuild activity has likely peaked.

INDUSTRIAL INVESTOR CONFIDENCE

-47%-58%

-51%

69%

25% 25%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Auckland

Net %

Wellington Christchurch

Dec-08 Mar-16

Source: Colliers International Research New Zealand

Investors searching for yieldsInvestor confidence exhibited in the sector has pushed yields for New Zealand’s industrial investors to some of the strongest amongst the recent global Colliers International survey of 150 cities sampled.

The average industrial prime yield for cities with the top 10 rents is 5.5 per cent. This was 5.9 per cent in June 2015. This compares with Auckland at 6.4 per cent, Wellington at 8.0 per cent and Christchurch at 7.4 per cent.

The relative comparability of rates is an indication of the strong demand and competitive bidding for industrial property in New Zealand when compared globally.

30 Highbrook Drive, East TamakiLeased on behalf of McPhersons Consumer Products



30 Highbrook Drive, East TamakiLeased on behalf of McPhersons Consumer Products

Our large global gap exists due to a strong demand environment. Vacancy rates have reduced significantly in New Zealand, with Auckland, Christchurch and Wellington all experiencing declining vacancy rates over the past year to record lows of 2.2 per cent, 2.1 per cent and 3.6 per cent respectively.

Rising rents and firming yields in the three main New Zealand cities have seen capital values increase steadily in recent years. Despite the strong performance of the sector, which has now passed the last cyclical peak across many indicators, there is likely to be more supply, demand and investment activity.

Robust property fundamentals have aided investor confidence in the sector. We predict this will be a driving factor for even more capital value increases in the medium term.

Offshore buyer interest in commercial property in New Zealand has risen in recent years, but the majority of activity has been for flagship office premises and regional shopping centres across New Zealand.

INDUSTRIAL TOP 10 AND NZ YIELDS

3.9% 4.0%

4.8% 5.0%5.3% 5.4%

5.8%6.4%

7.4% 7.5% 7.5%8.0%

Brist

ol

Toky

o

1%

2%

3%

4%

5%

6%

7%

8%

9%

Aver

age

Prim

e Yi

eld


Investment activity robustIn 2015, as in most years over the last two decades, almost half of all sales activity in New Zealand was in the industrial sector.

In buoyant periods of sales, industrial typically totals between $2.2 billion and $3 billion of sales, and in periods of slower activity between $1 billion and $2 billion. Despite the buoyant activity in the last few years, the total value remains below the 2007 peak of just over $3 billion. This signals that sales activity in the industrial sector should keep rising over the next few years.

Highlighting the lower number of higher valued industrial properties available for purchase is the proportion of industrial sales that now sell for more than $5 million. Last year the industrial sector represented only 39 per cent of total activity at the upper price band. It is also a key why there is limited offshore investment in the industrial sector as investors are typically looking to purchase at scale.

NEW ZEALAND COMMERCIAL PROPERTY SALES (BY SECTOR)

0

1500

3000

4500

6000

7500

9000

10500

$0

$1,500

$3,000

$4,500

$6,000

$7,500

$9,000

$10,50019

98

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Number of Sales

Valu

e of

Sal

es $

(mill

ions

)

Commercial Mix O�ce Retail Industrial New Zealand Number of Sales


Strong demand, low vacancy


Auckland’s industrial vacancy remained at a record low 2.2 per cent in the latest Colliers International survey. However, the prime vacancy rate edged up to 1.7 per cent while secondary vacancy reduced to 2.4 per cent over the past year.

Overall net absorption in Auckland’s industrial sector, which takes into consideration supply and vacancy changes, reached 180,000sqm over the past year. This is down from the 235,000sqm reached in February 2015, but signals the lack of space to lease rather than a lack of demand. There was 169,000sqm of space constructed over the past year, with only a minimal increase in vacant space.

In Wellington, demand for industrial space pushed the vacancy rate to a record low 3.6 per cent with less than 100,000sqm of space now available. This is well below the nine per cent reached in late 2012. The majority of the reduction was due to limited new supply coupled with strong tenant demand. More than 70,000sqm of vacant industrial space has been absorbed in the last two years. The latest Performance of Manufacturing Index points to further growth in the sector along with employment numbers which will encourage further positive absorption numbers over 2016.

Christchurch’s economy continues to outperform New Zealand’s, reflecting the progress in rebuild activity. This has kept tenant demand for industrial space in Christchurch at all-time highs over the last few years. Colliers International’s latest vacancy survey is at 2.1 per cent, down from 6.2 per cent in 2012.

However, the latest vacancy reduction is due to a decrease in available supply. Vacated buildings are being demolished to create room for new premises or undergoing “make-safe” requirements. The growth in the supply and fractionally lower expectations of significant sector expansion will ease tenant pressure to locate new premises over the short to medium-term.

INDUSTRIAL VACANCY RATES

2.8%

5.4%

3.1%

2.2%

3.6%

2.1%

0%

1%

2%

3%

4%

5%

6%

Auckland Wellington Christchurch

Vaca

ncy

Rate

2014 2015


5 Reliable Way, Mount WellingtonSold on behalf of Delmaine Properties Ltd



Globally cheap industrial rentsColliers International’s global industrial survey (based in USD/sqft per annum) of more than 150 cities from December 2015 showed Auckland, Christchurch and Wellington’s average prime net rents are rising, but globally cheap, ranked 38th, 51st and 71st respectively.

Auckland and Wellington’s latest rankings are slightly ahead of June 2015’s rankings of 40th and 84th. Christchurch has slipped fractionally from 49th spot in the June 2015 survey. Rents were up in Auckland and Wellington and flat in Christchurch in local currency rates. The exchange rate boosted our rental rates from a global perspective, which assisted with the rankings.

The top industrial rents are more than three times the rate of New Zealand’s most expensive city – Auckland. Top spot globally was Hong Kong with an impressive NZ $365/sqm per annum. Hong Kong knocked London (Heathrow) off the top spot in the June 2015 survey. Hong Kong also had the highest prime office rent in Colliers International’s latest global office survey with NZ $2,911/sqm per annum.

Outlook remains encouragingEconomic growth continues to support the expansion of the industrial sector. Businesses are reporting growth in orders, production, output and employee numbers. This bodes well for vacancy rates to reduce further as demand intensifies. However, capacity may become an issue as the pace of construction activity is not sufficient to keep up with demand, particularly in Auckland. Wellington’s pace of absorption may slow over the next 12 months as tenants increasingly find it difficult to find suitable space to lease. Christchurch’s market is likely to enter a period of change as demand pressures reduce fractionally after a continued period of significant demand. This will see rents in Auckland and Wellington increase by between one per cent and three per cent per annum over the next 12 months. Christchurch rents are likely to remain broadly in line with current rates, albeit 20 per cent to 30 per cent above pre-earthquake rates. Investors are chasing positive yield returns across the globe, and the industrial sector has experienced a significant firming in yields, now at record lows. We forecast this to continue. Interest rates remain low, fuelling private investors, syndicators, unlisted and listed property vehicles to remain competitive in the most traded commercial property sector in New Zealand.

RANK CITY PRIME NET RENT (NZD/SQM P.A.)

PRIME NET RENT (US/SQ FT P.A.) AVERAGE

1 Hong Kong $365.09 $23.22 4.00%

2 London (Heathrow) $348.14 $22.15 4.80%

3 Singapore $251.81 $16.02 3.90%

4 Tokyo $247.57 $15.75 5.40%

5 Geneva $219.06 $13.93 7.50%

6 Honolulu, HI $213.33 $13.57 n/a

7 Zurich $211.76 $13.47 7.50%

8 Oslo $197.87 $12.59 5.80%

9 Bristol $191.47 $12.18 5.30%

10 San Francisco Peninsula $181.10 $11.52 5.00%

38 Auckland $113.88 $7.24 6.40%

51 Christchurch $102.89 $6.55 7.40%

71 Wellington $90.91 $5.78 8.00%

INDUSTRIAL TOP 10 AND NZ YIELDS

232 Cavendish Drive, WiriSold on behalf of GEK Property

Source: Colliers International


Our experience INDUSTRIAL


How else can we help you?Speak to one of our property experts [email protected]

IN THE LAST 18 MONTHS

leased 20 Nation Link Drive Somerton, Vic71,300m²

On behalf of Austrak and GPT Group

24 Chisholm Crescent Kewdale, WA29,120m²

On behalf of OneSteel Trading Pty Ltd

1 Litton Close Greystanes, NSW45,046m²

On behalf of Argosy

more than 625 transactions covering 1.36 million square metres

sold1 Sudlow Road Bibra Lake, WA$350 million

On behalf of Aspen Group Management Pty Ltd

3 Roberts Road Eastern Creek, NSW$253 million

On behalf of Goodman Property Services (Aust) Pty Limited

GIC-Frasers Logistics Portfolio NSW, VIC, QLD, SA, WA $1.073 billion

On behalf of GIC and Frasers Property Australia

$6.24 billion of industrial assets

managed21 & 31 O'Sullivan Circuit East Arm, NT130,000m²

On behalf of Challengers Limited

1-5 & 2-6 Bishop Drive Port of Brisbane, Qld126,047m²

On behalf of Logos

1 Hume Road Laverton North, Vic230,000m²

On behalf of Logos

more than 1.87 million square metres

valuedMFive Industry Park, 1 Moorebank Avenue Moorebank, NSW194,200m²

On behalf of Goodman Funds Management Australia Limited

133 Lenore Drive Erskine Park, NSW 118,500m²

On behalf of Goodman Funds Management Australia Limited

1 Griffin Crescent Brendale, Qld 50,442m²

On behalf of BankSA

over $9.1 billion worth of industrial space

project managedRefurbishment & modernisation Girraween, NSW10,000m²

On behalf of Caleven Pty Ltd

35 Bryant Street Padstow, NSW7,000m²

On behalf of Lincoln Electric

5 Inglis Road Ingleburn, NSW6,000m²

On behalf of CS Logistics

projects delivered by our award winning team

Our experience INDUSTRIAL AUSTRALIA AND NEW ZEALAND

For more information about Colliers Internationaland working with us visit: www.colliers.com.au

IN THE LAST 18 MONTHS

Warehouse C, Beverley Industrial Estate, Pope Street Beverley, SA5,290m²

On behalf of Frasers Property Australia Pty Limited (Australand)

265 Macarthur Avenue Hamilton, Qld27,389m²

On behalf of QLD Government

91 Transport Avenue Netley, SA6,494m²

On behalf of Tonic Pty Ltd

more than 625 transactions covering 1.36 million square metres

2-12 Banfield Court Truganina, Vic$94.1 million

On behalf of Goodman Property Services (Aust) Pty Limited

95 Gilmore Road Berrinba, Qld$81.3 million

On behalf of GIC/Frasers

39 Herbert Street St Leonards, NSW$150 million

On behalf of Altis Proeprty Partners Pty Ltd

$6.24 billion of industrial assets

130-140 Parraweena Road Miranda, NSW12,000m²

On behalf of private client

30 Union Circuit Yatala, Qld8,664m²


15-17 Berry Street Granville, NSW38,800m²


more than 1.87 million square metres

Huntingwood Business Park 45 Huntingwood Drive Huntingwood, NSW 44,806m²

On behalf of Goodman

1 Saintly Drive Truganina, Vic26,417m²

On behalf of IOOF

9 Orielton Road Smeaton Grange, NSW 23,100m²

On behalf of IOOF

over $9.1 billion worth of industrial space

38 South Street Rydalmere, NSW1,200m²

On behalf of Tyco

Industrial expansion Girraween, NSW1,200m²

On behalf of Trend Windows & Doors

201 Alexander Road Perth, WA1,000m²

On behalf of 3M

projects delivered by our award winning team


How else can we help you?

Speak to one of our property experts today.www.colliers.com.au www.colliers.co.nz

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Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. © Colliers International 2016.

Documents

2016 Industrial RFR H1_web