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Industrial asset sales reach $5b

Despite volatility in global financial markets, the Australian industrial market is tipped to remain robust in 2016. Investors have poured more than $5 billion into the industrial property market in the past 12 months and as much again is tipped as several deals are completed.
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Charter Hall and GPT are among the trusts that have earmarked what they view as non-core assets for sale to take advantage of the solid demand for properties by local and overseas buyers.

It was understood about $1.5 million worth of major assets were in due diligence or under conditional contract going into the Christmas break. More are said to be due soon.

DEXUS executive general manager, office and industrial, Kevin George said last month he continued to see an uptick in tenant inquiry and demand for industrial property, particularly in south Sydney, benefiting from supply withdrawals for alternative use.

The sector has benefited from the rise in the use of the internet, as storage for the third-party logistic operators, but also demand by retailers to use the sites as an additional business, including supermarkets.

It was the standout investment in the recent reporting season as landlords said there was net effective face rental growth.

JLL’s head of industrial, Australia, Michael Fenton, said Sydney led the strong uplift in occupier demand in east coast markets last year.

“We believe this take-up is being driven by a number of factors. With ongoing redevelopment of former industrial space into residential and other uses and tenant displacement from infrastructure projects and other market changes, we foresee the former occupiers of this space will continue to be a source of demand in 2016,” Mr Fenton said.

“Despite the volatility in global financial and commodity markets, we expect the Australian industrial market to remain robust throughout 2016 as investors seek superior returns from industrial assets and recognise the stability of the broader Australian economy and its industrial growth drivers.”

CBRE national director, industrial and logistics, Jason Edge said the demand for industrial space in Sydney was driving a surge in speculative development with institutional land owners either developing with no tenant in place or on the back of a partial pre-commitment.

Mr Edge tipped that a focus by third-party logistics companies on developing a “hub and spoke” model to best serve customers would drive demand for “infill” locations such as south Sydney, on the north shore and middle-ring areas such as Homebush and Chullora to supplement locations in the west and south-west.

“This would be driven by e-commerce, with Australian organisations to be challenged by the expectations in the US whereby groceries are looking to be delivered within two to three hours and Amazon deliveries within the next hour,” Mr Edge said.

“Our expectation of how products are provided in Australia is going to change and the provider is going to have to change in tandem with this.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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