Straits heads for $1bn in Australia’s booming logistics market

Singapore’s Straits hopes to boost its Australian portfolio to $1bn. Picture: Supplied by Commercial & General

Singapore’s Straits Real Estate is doubling down on its investment in Australia’s booming logistics market, with plans to boost its industrial property portfolio to more than $1bn.

Straits made its first foray into the Australian logistics sector in 2018 when it launched a specialist fund with joint venture partner Commercial & General.

After growing the Integrated Logistics Partners fund to close to $500m, Straits took over full ownership last week, acquiring a 20 per cent stake held by the Adelaide-based developer.

The eight properties in the fund are located in South Australia and Victoria, and are occupied by tenants including Coca-Cola, Raytheon, Siemens, Incitec Pivot and Visy Glass.

And now Straits plans to more than double its assets under management to more than $1bn through newly formed development company Terre Property Partners.

Straits has taken a major stake in the company which will be managed from Adelaide by former Commercial & General executives Mark Brammy and Mark Pettman.

Straits chief executive Desmond Tang said the company would deploy capital in key industrial markets across the country.

“The buyout signals the compelling growth we see in Australia’s industrial and logistics sector where longer-term macro trends such as continuing acceleration in e-commerce adoption, rationalisation of supply chains and population growth have supported strong demand for quality space and rental growth, not just in the traditional eastern seaboard markets, but also in other regional hubs,” he said.

Investor appetite and occupier demand for industrial assets has surged since the onset of Covid-19, fuelled by the rise in e-commerce activity, onshoring and a shift in global supply chains.

Commercial & General is bullish about the long-term prospects for the market, and will use the capital raised through the sale to Straits to seed a pipeline of development projects for defence and logistics users.

It has snapped up about 30ha of industrial land across in Adelaide in recent months, including in the northern industrial precincts of Edinburgh and Gepps Cross, and the Evans Clarke auction storage site on Torrens Rd in Woodville North.

Chief executive Trevor Cooke said a flight to quality was driving demand from occupiers seeking modern and hi-tech industrial facilities.

“We’ve got a really exciting pipeline in front of us … and we’ve probably got now the largest industrial land bank in the state,” he said.

“And to be frank we’re spoilt for choice because there’s just so much activity. It’s literally, without exaggeration, coming in daily, in terms of the level of inquiry that’s coming in.

“Organisations are much more focused on proximity to their employees and amenity than if you think about what industrial maybe used to look like as a sort of beaten down and dirty sort of asset class.

“Covid, if nothing else, accelerated certain trends that were on foot, including retailing trends which have substantially altered with things like last mile logistics and inner city logistics.

“And at the same time you’ve got increasing concerns around supply chain management, and onshoring is part of that trend.”