Western Sydney emerging as industrial hotspot

Western Sydney is emerging as speculative industrial development hotspot, according to Joshua Charles, regional director of industrial services at CB Richard Ellis.

Charles says six speculative projects (those not being built for a specific tenant) are now on the go, with most of these occurring in western Sydney. These new developments started four to six months ago, as a year ago there were no speculative projects on the horizon in western Sydney.

Industrial construction is being driven by a lack of available warehouse space at the same time as western Sydney emerges as a logistics and retail distribution hub.

In April, CBRE reported that the supply of large industrial space in western Sydney had all but dried up following supermarket group IGA snapping up 22,750 square metres of space in two separate buildings in the western Sydney suburb of Glendenning and Arndell Park, the Blacktown industrial suburb.

Among the mega projects under construction in western Sydney is Goodman’s 56-hectare Bungarribee Industrial Estate, bounded by the M4 Motorway, Great Western Highway and Brabham Drive in Huntingwood West.

Grocery wholesaler Metcash has signed up for an 82,015-square-metre warehouse and office building on the estate, which is being built over three stages with delivery dates between October 2011 and May 2012.

Other speculative projects earmarked for western Sydney are at various stages of development.

DEXUS Property Group has committed to build a 21,000-square-metre warehouse in Erskine Park, 42 kilometres west of Sydney in the Penrith area and has also lodged plans for a 4,800-square-metre building at Blacktown.

Two projects are proposed for Eastern Creek, 40kilometres west of Sydney. Australand is planning a 21,800-square-metre project, and Goodman has development application approval for a 6,000 sqm facility on ING’s former Interchange Park site

“If the development is on a well-located piece of land, by the time it’s at the lock-up stage, it will have been leased,” Charles says.

Pent-up demand for warehouse space has been building since the end of the GFC.

According to Charles, construction of new industrial space ended in 2007-08. Before the GFC, 100,000 square metres of new industrial space came onto the market every year.

“Demand is building up. If you look at the third-party logistics market, it is undergoing massive growth,” Charles says.

“Buildings that were once vacant are now being leased.”

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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