ESR and Frasers snap up $200m industrial site from Rich Listers
Logistics giants ESR and Frasers Property Industrial have joined forces to snap up a 64.4ha development site in Melbourne’s south-east which they plan to develop into a $900 million industrial estate.
While both developers and the site’s vendor, the Rich List Tarascio family’s Salta Properties, were tight-lipped on the purchase price, well-placed industry sources said the 635 Hall Road property in Cranbourne West had transacted for more than $200 million.
Early site work is expected to start in late 2024, with the first buildings to be completed in 2026. About 25 per cent of the site will be set aside for small lot subdivisions to cater for smaller developers also battling a scarcity of zoned industrial land.
Salta Properties, a major developer and owner of logistics estates, will retain about 60ha of land to the north of the Hall Road site for future development – the remaining portion of a larger 123ha site that the Tarascios purchased for about $160 million in 2021 (from Leighton Property and Dacland).
ESR and Frasers’ 50:50 joint venture acquisition in Cranbourne is the latest big money deal for industrial land in key east coast markets where vacancy rates remain around 1 per cent and rents are still rising in the high single digits after surging 45 per cent since 2021.
Earlier this month, UniSuper and ISPT snapped up a huge site near the new Western Sydney Airport precinct for about $800 million with plans for a $4 billion estate, while UniSuper in February paid $260 million for a 66ha site in Deer Park in Melbourne’s west.
Industrial property’s rise since the pandemic has seen it draw neck-and-neck with the beleaguered office market in terms of total investment value, with CBRE forecasting the sector to be worth more than $400 billion by the next decade.
With very little vacancy and still strong demand in Melbourne’s south-east, ESR Australia chief executive Phil Pearce said both developers, which have worked together on projects in the past, were keen to take up the opportunity in Cranbourne.
“We’ve talked on and off for a long time and both of us knew this land opportunity was coming up,” Mr Pearce told The Australian Financial Review.
“We thought it may be an occasion where we work together as we both have successful track records in Melbourne’s south-east.”
With its access to major arterial roads including the Western Port Highway, South Gippsland Freeway, EastLink and the future Salta Properties’ Dandenong South Inland Port, Melbourne’s south-east is well suited to large industrial estates.
Demand for premium sites
Major occupiers in the corridor include Amazon, Dulux, Aldi and Woolworths.
Both Mr Pearce and Ian Barter, Australian managing director of Frasers Property Industrial, hosed down any speculation the two companies may be exploring a wider partnership or even a merger.
ESR manages total assets across the Asia Pacific of $70 billion (and $236 billion globally) while Singapore-listed Frasers Property Industrial has $45 billion of assets under management.
“Don’t read too much into this deal. We work together on a project-by-project basis,” Mr Pearce said.
Mr Barter said the JV deal aligned with Frasers Property Industrial’s goal to expand its development pipeline in key areas across Victoria, adding to its 2.2 million sq m land bank in Australia.
“The increased demand for premium industrial assets persists and this site holds immense potential,” he said.
Andrew O’Connell from GO Commercial Industrial brokered the Hall Road sale on behalf of Salta Properties.
