Empty block of land in western Sydney tipped to fetch at least $9.1 million

The Erskine Park site has approved plans for a one-hectare industrial development with four warehouse units – each about 2200 square metres – and a mezzanine area for office space.

The lack of available smaller sites that developers and owner-occupiers can develop on or use is driving up warehouse strata unit rents that have long been stagnant, selling agent John Swanson, from Knight Frank, said.

“Historically these areas are a bigger box, larger sheds, so this allows someone to build something that could be a smaller size. There aren’t really too many other options for tenants to choose other than this, so it will have a positive impact on rental growth,” he said.

“Any land that gets sold out there is much larger, and gets sold out to a fund or a REIT (real estate investment trust).

“I have tested a few of them (funds and REITs) and they’ve said that it is too small.”

Zhong Family Investments Pty Ltd bought the Erskine Park asset for about $5.45 million in April 2017 from GPT.

Mr Swanson said the family originally bought it with the intent to build, hold, lease and keep it in their super fund, but because of a change in family circumstances, they are choosing to sell it and “take the uplift from the market and the development approval”.

“The DA itself might not be usable for certain people but the envelope is there for someone to go and (develop). The fact that this has already been done means a potential purchaser’s holding costs are far less than what it would normally be.”

Another vacant site occupying 4.99 hectares in neighbouring Minchinbury sold for $600 a square metre, or about $30 million, earlier this year.

Build it and they will come

It’s approved for four warehouse units occupying a combined 1 hectare. Photo: Supplied

More than 100,000 square metres of speculative industrial developments are tipped to come online in the next 12 months, a Knight Frank research shows.

Speculative developments are projects which commence building before any lease commitments are secured – a signal of developer confidence in the market.

The GPT Group was speculatively developing a 25,000-square-metre logistics facility in Sydney’s Eastern Creek last year, which the developer has since fully leased out. It also has another 11,260-square-metre site in Huntingwood, in Sydney’s west, due for completion in the second half of 2018.

Meanwhile, stage two of Stockland’s Ingleburn Logistics Park in south-west Sydney, which has two warehouse facilities on 36,850 square metres, is one of the developer’s current speculative projects.

“The take-up of stock is happening before practical completion; there hasn’t really been anything that sits around after practical completion, it’s all getting done (leased) before they’re ready to hand over the keys,” Mr Swanson said.

Asked how long it could take to secure a tenant for a new warehouse unit, the agent said: “If you allow a six to nine-month build time, it can take anywhere from that time.”