REITs snap up over 300 hectares of western Sydney industrial land

It's being called NSW’s great land bank rush. New data from Savills Australia showed that since 2009, more than 300 hectares of industrial land in Sydney's western precinct has been snapped up by developers and real estate investment trusts (REITs).

The great rush has seen Sydney’s industrial land banks total an estimated 1,100 hectares, the bulk of which (75%) is held in the western precinct. 

By Savills calculations the land take up in the western precinct (Eastern Creek, Erskine Park, Arndell Park, Wetherill Park, Smithfield, Yennora and Girraween) has been at over 63 hectares per year since 2009.

Pre-lease activity has accounted for about 40 hectares of land take up per year, with over 1,000,000 square metres of gross lettable area secured by tenants seeking new logistics style accommodation within this corridor. 

Houssam Yakzan of Savills Research said: “there is strong demand from all the current land bank owners in the western precinct to further increase their land holdings and for REITs that don’t have any land banks they will be aggressively seeking to purchase land to grow their development pipeline.”

“As land reserves diminish with each new development, industrial land is being hotly contested".

He also noted that there was an enormous weight of money for industrial property right now and if a fund wanted to grow, more than likely it would need to grow from organic origins – either develop speculatively or play the pre lease market on their large land banks.

With the current demand for sites in excess of 10 hectares, Yakzan believes land values will be enhanced in the short term and throughout 2014.

Values in late 2012 to early 2013, he said, sat at a rate of $200-$225 per square metre for these large sites which were serviced and benched lots.

It is now tipping rates to be revised to between $250-$275 per square metre.

Smaller sites of one hectare have already experienced an increase in value - from just under $300 in March 2013 to now averaging $325 per square metre. 

Photo courtesy of Flickr/Creative Commons.