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Sydney-based developer and racehorse owner Neil Werrett has made a foray into Melbourne’s industrial land market, swooping on a 53 hectare block for $130 million.
Werrett’s Galileo group put its foot on a large corner site in Melbourne’s south-east at Clyde North that was being offloaded by developer Tony and Steven Sass’ Oreana Group.
Industrial vacancy rates in many markets are under 1 per cent.Credit:
The transaction is a canny property play for the Sass’ business. Title documents show Oreana group only recently settled on the block, paying $60.5 million in May this year.
Industrial land is fetching a premium, particularly in Melbourne’s south-east where large sites are scarce and there is strong leasing demand and super tight vacancy rates for warehouse space.
The 53.58 hectare parcel at 585 Berwick-Cranbourne Road is part of an infill location running parallel to Thompsons Road sitting within the Croskell industrial precinct structure plan, allowing for the development of a flagship, institutional-grade business park.
Neither Oreana or Galileo responded to requests for comment.
Paul Callanan from real estate agency LAWD, who negotiated the sale with Peter Sagar, said the land is surrounded by other residential, commercial and industrial developments.
“There is currently a flight to quality, and this was simply the best remaining industrial infill site in the most sought-after growth corridor of Melbourne,” Callanan said.
The block has a potential developable area of about 41 hectares.
Other developers are also in the hunt for sites in the south-east. In May, private developer MAB Corporation, owned by Victorian property identities Michael and Andrew Buxton, paid about $75 million for a 45-hectare land parcel nearby in Cranbourne East.
MAB’s two adjoining sites, also facing Thompsons Road, are expected to be turned into an industrial and logistics estate worth an estimated $400 million once fully developed.
Callanan said LAWD had transacted more than $500 million in the area over the past 18 months.
After a successful two decade career at AMP Capital, Werrett founded the Galileo group in 2003 which now controls about $13 billion of commercial real estate in Australia, the US and Japan.
He is on the board of the Victorian Racing Club and is well-known in the thoroughbred horse racing industry as the part owner of champion mare Black Caviar and other Group 1 winners.
Oreana Group recently lodged plans for a $250 million mixed-use development on Toorak Road in South Yarra.
The developer is hoping to build a 17-level tower with a 116-room luxury hotel and 9300 square metre office complex above South Yarra Square, an Italianate and mock-Tudor building on a 1853 sq m site.
A recent Collier’s third quarter industrial overview report says the exuberant pace of growth seen in 2021 is starting to abate as uncertainty weighs on investors.
“Occupier demand remains elevated, however, with vacancy rates in many markets being under 1 per cent, occupiers are having to look to new space to satisfy business expansion plans,” the Australian Industrial and Logistics Snapshot said.
The market is well on its way to having its second most active year of demand on record, led by retail trade and transport and logistics users who, collectively, have leased 67 per cent of available space so far this year, it says.
“Rents continue to achieve new benchmarks in all markets, underpinned by the lack of leasing options which has forced tenants to compete aggressively for space.”
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