Investors branch out amid scarcity of prime Brisbane assets

Brisbane’s industrial market is experiencing strong demand, with institutions dominating the investment landscape and accounting for $266.2 million of the $359.5 million in transactions in the first half of the year.

According to a report from Colliers International, the most sought after properties are prime assets that have long Weighted Average Lease to Expiries (WALEs) with strong covenants in prominent locations.

But due to the scarcity of such opportunities, investors are also pursuing properties that either have vacant possession or short-term lease expiry profiles.

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Colliers says consolidation has been a key driver in the market for large format, high quality industrial facilities, with many business operators looking to centralise and streamline their operations.

Owners should be cashing in on these significantly improved conditions as the buyers appetite continues to increase

Pat Cavanagh, director of industrial at Colliers International, notes the trend in the recent sale of a large freehold property at 1 Activity Crescent, within the Molendinar industrial precinct on the Gold Coast.

Camcorp Enterprises purchased the property for $2 million, well above market expectations.

“The seller is consolidating his business and will maintain a presence in the area in the adjoining property at 3 Activity Crescent,” Cavanagh says.

Cache Logistics Trust paid $75 million for three distribution warehouses

Cavanagh says the market is moving quickly and signs are positive for the remainder of the year, with strong interest in industrial property coming from buyer groups, investors, developers, tenants and owner occupiers.

“Owners should be cashing in on these significantly improved conditions as the buyers appetite continues to increase,” he says.

Over the course of the year, portfolio sales are expected to remain a prominent element driving investment activity

Colliers’ ‘Evolution of Warehouses’ report notes that portfolio sales have been particularly buoyant, as vendors seek to capitalise on strong investment demand.

In particular, offshore investors have been keen to gain a foothold into the market, with portfolio acquisitions ensuring a diversification of risk by investing in a range of property asset classes.

“Over the course of the year, portfolio sales are expected to remain a prominent element driving investment activity,” the report says.

Cache has ploughed more than $100 million into warehouse acquisitions

Singaporean institutional REITs have been active, with Cache Logistics Trust making its first Australian acquisition in February, paying almost $75 million for the McPhee portfolio of three distribution warehouses.

Cache Logistics Trust further cemented its presence in Australiaby entering into an agreement earlier this month to purchase a warehouse at 203 Viking Drive, Wacol, for $29.5 million.

The warehouse, which sits on freehold land of about 22,440sqm and has a gross lettable area of 13,363sqm, is a modern single-storey warehouse with two levels of ancillary office space.

Cache CEO Daniel Cerf says: “The proposed acquisition will boost Cache’s Australian portfolio to four warehouses, and further expands our footprint in this market.”

“The long WALE of 7.9 years by lettable area will also lengthen Cache’s portfolio WALE to 4.6 years and strengthen its ability to deliver regular and stable distributions to unit holders.”