Owners of older-style industrial properties benefitting from Botany Bay LEP
The recent implementation of the new Botany Bay Local Environmental Plan is pushing up land prices and benefiting owners of older-style industrial properties, according to CBRE.
Developer demand is at its highest level in a decade, with developers looking for opportunities and sites that can accommodate retail and apartment projects.
A 1,600-square-metre industrial building at 1144 and 1146 Botany Road owned by hang glider manufacturer Moyes sold for $3.65 million to Icon Construction Group.
"As an industrial building the property was worth $2.5 million to $3 million, but the potential to redevelop the site under the new LEP pushed the sale price to $3.65 million," says CBRE capital markets director Daniel O’Brien.
The site can accommodate a boutique development of around 18 to 20 units above ground floor retail space.
“Residential developers are being very bullish at present as they know that the end product, particularly in this style of boutique project, will virtually sell out on launch day,” says O’Brien.
Botany Road Project Pty Ltd recently pushed 767 Botany Road in Rosebery for $11 million.
A development application has been lodged to build 11,400 square metres of retail space and 88 apartments.
“The site had no approval or income, and we still had multiple purchases making offers,” says O’Brien.
“The potential for change of uses, proximity to rail and the end price point is driving demand for mixed use sites in this market.
“The strength of retailer interest for available opportunities is also underpinning demand,” says O’Brien.
O’Brien says the demand for retail space, especially food and liquor, is extremely competitive.
"So while we have seen considerable pain over the past few years at the discretionary end of the market, in areas such as fashion retailing, the convenience end of the market and non-discretionary retailing has been very resilient.
“We've also seen the major supermarkets and liquor stores completely shift their focus when opening new stores or assessing new sites,” says O’Brien.
O’Brien says planning constraints and increased competition from IGA and Aldi has seen major supermarket operators be more flexible with their requirements, adapting to much smaller format stores.
The Botany Bay LEP commenced on June 26 and is designed to encourage sustainable economic growth and development and to recognize the important of Botany Bay as a gateway to Sydney.