2014
Industrial Investment Market Review and Outlook
Contents 03
Executive summary
04
Looking backwards: the industrial investment market in 2013
10
Major transactions throughout 2013
14
Demand drivers and physical markets
20
The investment market themes in 2014
Executive summary 2013 was a momentous year for industrial investment activity. Transaction activity gathered pace during the final quarter, resulting in the second highest year of industrial transactions on record (Figure 1). 2013 was also notable due to the number of new entrants to the market. We saw some reversal of the consolidation that had occurred in 2009 and 2010. A large wave of capital is now looking to get set in the industrial sector in 2014. With a limited pipeline of approximately AUD 1.5 billion of new assets created last year, investor demand is outweighing supply. The momentum from 2013 has carried over seamlessly into 2014, and a number of transactions indicating further yield tightening have been announced. Some owners are likely to become more willing vendors and offer product to the market as pricing improves. With such a flourish of activity to end 2013, the outlook for 2014 is very positive. Throughout the report, we consider the following investment questions: • What drove investment demand in 2013? Where was the focus of capital? And what were the notable transactions? • Who are the new players and will they lead or follow in 2014? • Are the physical markets supportive of tighter pricing? • Which of these investment criteria will be most important in 2014: hunt for yield; hunt for WALE; hunt for scale; hunt for product; pursuit of geographical re-weighting? • What are the opportunities? Figure 1: Total Industrial Transactions Value of Transactions (AUD, million) $5,000
Number of Transactions 300 250
$4,000
200
$3,000
150 $2,000
100
$1,000
Value
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
$0
50 0
Number
Source: JLL Research
Industrial Investment Market Review and Outlook – 2014 | 3
Looking backwards: the industrial investment market in 2013 Volumes The volume of industrial transactions in 2013 was the highest since 2007 and the second highest on record. Industrial transaction volumes have increased each calendar year since bottoming in 2008. In 2013, the value of major transactions recorded was AUD 3.3 billion. Sales transaction volume had been remarkably consistent each quarter of 2013 prior to the fourth quarter (Q1 AUD 559.9 million; Q2 AUD 597.6 million; Q3 AUD 661.6 million; Q4 AUD 1.47 billion). The result was the second highest volume of industrial transactions in a calendar year (AUD 3.3 billion in 2013, still significantly below the AUD 4.4 billion recorded in 2007). Average sales prices have been increasing each year since 2009, confirming the increased volume of larger format asset sales, the growing investor desire to place capital in the industrial sector and steadily rising capital values. In 2013, the average sale price was AUD 20.4 million from a total of only 161 major property transactions. This was mostly driven by large sales in Sydney (average price AUD 28.5 million) and Melbourne (average price AUD 22.0 million), though average sales prices lifted in all markets except Perth during 2013. Volume was boosted by a number of very large transactions. The largest sales in 2013 include: Price ($m)
Property name or address
Purchaser
Vendor
$343.0
Sydney Corporate Park, Alexandria
Goodman (GAIF)
Rathdrum Properties
$121.0
Somerton Logistics Centre
Charter Hall Core Logistics Partnership
Hunt Family
$72.85
40-88 Forrester Road, St Marys
Stockland
Goodman (GAIF)
$70.5
Kmart Distribution Centre, Canning Vale
Charter Hall Core Plus Industrial Fund
Commonwealth Bank Officers Superannuation Fund
$65.0
52-58 Lisbon Street, Fairfield
Aviva Investors
Blackstone Morgan Stanley
$63.5
Metcash Regional DC, Canning Vale (50%) Charter Hall Core Plus Industrial Fund
Australian Unity
$62.6
Oakdale South (Site), Eastern Creek
Joint Venture Industrial Property Trust (Goodman/Brickworks)
Brickworks
$55.0
Eastern Creek Quarantine Facility
Mirvac Group
Commonwealth Department of Agriculture
Source: JLL Research
4 | Industrial Investment Market Review and Outlook – 2014
New investors join the established players in the hunt for industrial property Of the AUD 2.15 billion of transactions identified as ‘opportunities’ or ‘portfolio’ sales in 2013, five groups accounted for AUD 1.16 billion (54%): they were Goodman, Charter Hall, DEXUS, The GPT Group and Australian Industrial REIT (managed by Fife Capital Funds Limited). To be sure this purchaser concentration was not only a result of large value asset purchases, we also analysed the transactions by the number of properties purchased. Looking only at those same five groups again, they accounted for 68% of all transactions >AUD 30.0 million and 49% of all transactions >AUD 20.0 million. The top 5 purchaser groups accounting for 54% of transaction volumes in one year is eye opening. Large established AREIT and wholesale fund manager platforms are attracting solid investor support. However, this concentration is being challenged by new entrants and some older players with revised strategies looking to increase their industrial assets under management. Prominent purchasers in 2013 include CorVal, PropertyLink, Warrington, Abacus, Altis, 360 Industrial Fund, Stockland, Aviva, Kingsmede and Growthpoint. All of these groups purchased industrial property priced at >AUD 20.0 million last year. Many of them have stated ambitions to build their scale and launch new unlisted or listed funds platforms. The silent evidence is those groups that have been under bidders on property in 2013 and have unallocated capital waiting to be invested. As 2014 progresses, it will be interesting to watch the hunt for industrial property unfold. – Michael Fenton, Managing Director, New South Wales; Head of Industrial Services – Australia
Purchaser/vendor analysis Buying was dominated by large cap AREITs and wholesale funds in 2013. Wholesale funds were the largest purchasers of industrial property in 2013, accounting for 34% of transactions by value. AREITs purchased 17%, followed by private companies & investors with 16%, developers & property companies with 12% and syndicates rounded out the major purchasers with 7% of purchases in 2013. In contrast, there was very little concentration within the seller cohort. Only a few vendors sold multiple properties in 2013. Developers accounted for approximately 19% of transactions by value, followed by private companies & investors with almost 19%, corporates with 15% and wholesale funds at 11% rounding out the major sellers by type. On a net basis, only wholesale funds (AUD 744 million), AREITs (AUD 305 million) and syndicates (AUD 215 million) were net purchasers of industrial property in 2013. Net sellers include private companies & investors (AUD -101 million), developers & property companies (AUD -234 million), corporates (AUD -322 million) and others* (AUD -606 million). Figure 2: Buyer and Seller Types in 2013 Others* Corporates Syndicates Developers Private Companies & Investors AREITs Wholesale Funds 0%
10% Vendors
20%
30%
40%
50%
Purchasers
Source: JLL Research
Industrial Investment Market Review and Outlook – 2014 | 5
Figure 3: Industrial transactions by State - 2013
12%
3%
13%
48%
24%
Share of sales by market
NSW
VIC
Figure 3 shows Sydney accounted for the largest proportion of industrial property sales in 2013 (48%). This was the highest proportion of sales in Sydney since 2005. Melbourne was second highest (24%), followed by Brisbane (13%), Perth (12%) and Adelaide (3%).
Source: JLL Research
This analysis does not account for the relative size of the investable universe across the Australian industrial markets. JLL estimates that the investable universe of the five major cities is a combined AUD 31.2 billion. Figure 4 shows an adjusted view of transaction volumes, accounting for the size of the market. The net balance is calculated by taking the share of transaction volumes less the share of the investable universe. A positive figure indicates that a market is receiving a disproportionate share of transaction activity relative to its size.
Net Balance(%) 6
This has significant implications for the larger institutional investors seeking a diversified portfolio based on market weight analysis. As we will discuss later in the Investment Themes in this report, geographical diversification is becoming more important in the capital allocation criteria of some groups in 2014.
–2
These investment volume proportions largely follow the estimated market weight (by value) of each city in JLL’s Industrial Investment Universe model. However, a clear standout is Sydney, which accounted for 48% of sales volume, but is estimated to account for only 43% of market weight (by value). Several very large sales also occurred in Perth this year, driving the proportion of sales in that market above its benchmark market share by 2.5%. Institutional investment manager Charter Hall Group funds was particularly active in the Perth market in 2013. Charter Hall entities purchased interests in three properties, totalling AUD 156.6 million, roughly 41% of the AUD 382 million of Perth transactions last year.
6 | Industrial Investment Market Review and Outlook – 2014
QLD
WA
SA
Figure 4: Net Balance (Transactions Volumes & Investable Universe), 2013
5 4 3 2 1 0 –1 –3 –4 –5 –6
Sydney
Melbourne
Source: JLL Research
Brisbane
Perth
Adelaide
Pricing Transaction evidence showed prime and secondary grade yields have broadly firmed in 2013 (Figure 5). Prime grade yield compression was largely limited to Melbourne and Sydney in 2013. Melbourne West had 50 basis points of compression, followed by 37.5 bps in Melbourne South East and Melbourne North. The City Fringe saw 25 bps of compression. In Sydney, all sub-precincts had 25 bps of tightening of the prime midpoint yield, with the exception of the Outer North West, which tightened 37.5 bps.
Secondary grade yield compression was more extensive in 2013. The most yield compression in 2013 was recorded in Sydney Outer North West and Melbourne West at 62.5 bps. The Sydney Outer Central West recorded 50 bps of tightening and a host of sub-precincts recorded 25 bps of compression (Figure 6). The exceptions were the Sydney Outer South West, Brisbane Southern, all Perth sub-precincts and almost all Adelaide precincts with the exception of the Inner West-E.
Sub-precincts in other cities which saw yield compression were Northern Brisbane with 25 bps and Adelaide Inner West-E with 25 bps.
Yield tightening has previously been supported by the very wide spreads to Commonwealth Government inflation-indexed bonds. However, this asset pricing dislocation from historic benchmarks has been quickly unwinding – due to a combination of rising bond yields and decreasing industrial property yields.
Figure 5: Prime Grade Yield Compression in 2013 (Midpoint of Yield Range)
Figure 6: Secondary Grade Yield Compression in 2013 (Midpoint of Yield Range)
%
500
–0.
375
–0.
%
Source: JLL Research
250
–0.
%
%
125
–0.
Melbourne West
Sydney Outer North West
Sydney Outer North West
Melbourne West
Melbourne North
Sydney Outer Central West
Melbourne South East
Sydney South
Sydney South
Sydney Inner West
Sydney North
Melbourne City Fringe
Sydney Inner West
Melbourne North
Sydney Outer Central West
Melbourne South East
Sydney Outer South West
Brisbane Trade Coast
Melbourne City Fringe
Adelaide Inner West-E
Brisbane Northern
Sydney North
Adelaide Inner West-E
Brisbane Northern
Brisbane Trade Coast
Sydney Outer South West
Brisbane Southern
Brisbane Southern
Perth All
Perth All
Adelaide Other
Adelaide Other
00%
0.0
%
625
–0.
500
–0.
%
375
–0.
%
250
–0.
%
%
125
–0.
00%
0.0
Source: JLL Research
Industrial Investment Market Review and Outlook – 2014 | 7
JLL Research believes fair value for prime grade industrial sits at 515 basis points over a normal risk-free rate. As can be seen in Figure 7, even full mean reversion of the indexed bond rate (to 2.85%) from current levels would leave limited further scope for prime grade industrial property yield tightening on this basis alone.
Figure 7: Prime Grade Industrial Propertty Yield Spreads to Australian Government Inflation-Indexed Bonds (%) 8.0
Under-valued
7.0 6.0 5.0
Reference: 515 bp spread
4.0 Over-valued
3.0 Dec-03
Dec-05 Sydney (South)
Sydney (Outer Central West)
Source: JLL Research
8 | Industrial Investment Market Review and Outlook – 2014
Dec-09 Brisbane (Southern)
Dec-07 Melbourne (South East)
Dec-11 Melbourne (West)
Dec-13 Perth (East)
Transaction pricing ahead of the curve JLL set research yield ranges in each market following a meeting of the Sales and Investments, Valuations and Research teams to review recent or current transaction evidence. This means that, at times, JLL research can lead or lag the market during turning points. A good example of this was in 2008 when our research yield ranges were increasing, despite a lack of transactional evidence, which ultimately proved conservative during the GFC downturn. At that time, book values were behind the curve. Transaction liquidity eventually improved, providing enough evidence that softer yields were not outliners. Another occurrence of this divergence is emerging now – but this time in reverse. A rush of investment grade asset transactions occurred in the final few months of 2013. This evidence showed distinctly that prime grade yields had tightened lower than our research ranges set at the end of December. Our internal view had proved to be conservative – not wanting to move ahead of sales evidence. This is despite the JLL research forecasts for prime grade yields indicating a further 25-50bps of yield tightening could be expected in this cycle. At this stage, purchaser capital has sharpened pricing for better quality assets with core characteristics, particularly long dated lease terms to good covenants. The irrational exuberance experienced through 2006 and 2007 has not returned yet. – Al Carpenter, Head of Industrial Valuations and Advisory - Australia
Industrial Investment Market Review and Outlook – 2014 | 9
Major Transactions in 2013
1.
Somerton Logistics Centre, Somerton Vic Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$121,000,000 Oct-13 128,024 sqm 217,300 sqm 5.88% 7.93% 7.70% 9.19% $945/sqm 3.22 years Private Charter Hall Visy, Mazda
2.
2 Bannister Road, Canning Vale WA Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor
Purchaser Major Tenant(s)
5.
7-23 Dunmore Drive, Truganina Vic Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$47,640,000 Dec-13 16,960 sqm 91,690 sqm 8.01% 8.01% 8.01% 9.61% $2,480/sqm 20. years Montague Cold Storage CorVal Montague Cold Storage
10 | Industrial Investment Market Review and Outlook - 2014
6.
$70,500,000 Oct-13 79,041 sqm 161,865 sqm 10.77% 10.77% 9.15% 10.10% $892/sqm 3. years Commonwealth Bank Officers Superannuation Corporation Charter Hall Coles Myer Pty Ltd (Kmart)
16-20 Quarry Road, Stapylton QLD Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$44,500,000 Sep-13 41,372 sqm 81,516 sqm 9.87% 9.44% 10.35% $1,076/sqm 2.4 years Insight Logistics Park Pty Ltd GPT Group Secure Doc Advance, CAT, WOW
3.
52 - 88 Lisbon Street Fairfield
7.
Lot 200 Pine Road Yennora
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$65,000,000 Nov-13 59,828 sqm 83,700 sqm 8.69% 8.85% 8.48% 9.28% $1,086/sqm 2.06 years Private Aviva Fantastic Furniture
$43,500,000 Sep-13 33,198 sqm 73,860 sqm 9.45% 9.45% 8.66% 9.38% $1,250/sqm 2.8 years Kingsmede GPT Schenker
4.
218 Bannister Road, Canning Vale 50%
8.
10 - 16 South Street Rydalmere
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$63,500,000 Feb-13 105,356 sqm 208,600 sqm 8.68% 8.68% 8.62% 10.54% $1,186/sqm 11.75 years Australian Unity Charter Hall Metcash
$43,250,000 Aug-13 34,922 sqm 52,540 sqm 8.50% 9.28% 8.64% 9.45% $1,238/sqm 3.98 years DEXUS Kingsmede Payless Shoes & Other
Industrial Investment Market Review and Outlook - 2014 | 11
9.
13.
17.
1439 Lytton Road, Hemmant QLD Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$39,630,000 Nov-13 41,372 sqm 81,516 sqm 8.66% 8.24% 9.31% $1,543/sqm 3.8 years Undisclosed DEXUS Electrolux, Qbuild, Euroglass
60-80 Southlink Street, Parkinson QLD Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$34,250,000 Jul-13 8,413 sqm 26,734 sqm 7.77% 7.71% 9.53% $4,071/sqm 13.42 years Property Link Rand Transport
29 Glendenning Road Glendenning Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$29,500,000 Oct-13 21,298 sqm 50,659 sqm 7.94% 7.94% 7.93% 10.03% $1,385/sqm 12. years Greens Fife Capital Greens
12 | Industrial Investment Market Review and Outlook - 2014
10.
5-29 Frederick Road, Tottenham Vic
14.
Rand Refrigeration, Lot 500 Caribou Dr, Direk
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
18.
$39,075,000 Nov-13 100,990 sqm 164,445 sqm 9.01% 9.01% 8.99% 9.78% $387/sqm 8.67 years Cromwell Charter Hall AWH
$32,750,000 Aug-13 10,314 sqm 58,628 sqm 8.20% 8.20% 8.20% 10.50% $3,175/sqm 20. years EPC Pacific Pty Ltd Cromwell Property Group Rand Refrigeration
213-215 Robinsons Road, Ravenhall Vic Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$23,200,000 Nov-13 21,049 sqm 45,020 sqm 8.48% 8.48% 8.03% 9.35% $1,102/sqm 11.67 years Pellicano Growthpoint Fuji Xerox
11.
Roberts Distribution Centre Greenacre Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$37,400,000 Mar-13 15,871 sqm 46,370 sqm 7.47% 7.47% 7.35% 9.50% $2,356/sqm 12.8 years Goodman EPF Candida Stationary, Aus Air Express
15.
Symbion, 55-57 Kirby Street, Rydalmere
19.
85 William Angliss Drive, Laverton North Vic
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$32,000,000 Feb-13 24,457 sqm 35,370 sqm 10.33% 10.33% 9.85% 11.03% $1,308/sqm 5.16 years Uniting Church Fife Capital Symbion
Confidential Dec-13 60,310 sqm 210,800 sqm < 7.00% < 7.00% < 7.00% < 9.00% Confidential 20. years Murray Goulburn Co-Operative ISPT Murray Goulburn
12.
4 Inglis Road, Ingleburn Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$34,350,000 Jun-13 43,442 sqm 128,600 sqm 13.86% 13.86% 9.81% 10.42% $791/sqm 1.03 years Maremma P/L DEXUS Wholesale Property Fund Toll Jaclo & Rand Transport
16.
PMP 31-37 Heathcote Road, Moorebank
20.
254-294 Wellington Road, Mulgrave Vic
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
Sale Price (circa) Sale Date GLA (circa) Site Area / Coverage Initial Yield (passing) Initial Yield (fully leased) Equivalent Yield IRR Rate $/sqm GLA WALE (yrs by income) Vendor Purchaser Major Tenant(s)
$30,250,000 Jan-13 38,130 sqm 78,460 sqm 10.71% 10.71% 10.71% 12.09% $793/sqm 12 years PMP Property Goodman PMP Property
Confidential Dec-13 33,754 sqm 144,420 sqm < 7.00% < 7.00% < 7.00% > 9.00% Confidential 15.35 years Australasian Food Group Charter Hall Peters
Industrial Investment Market Review and Outlook - 2014 | 13
Demand drivers and physical markets Economic environment Global economic growth passed a trough in 2013 and is now slowly gaining momentum after two years of below-trend growth. The general economic environment is improving and 2014 is likely to see slightly stronger Global and Australian economic growth. Australian economic growth remains below-trend, but there is now increasing evidence that the transition away from mining investment to domestic drivers is gaining momentum. While not yet evident in national accounts data, more recent economic indicators suggest domestic demand is starting to respond to lower interest rates and gain some momentum. Retail turnover, housing market activity and credit growth have increased, while, importantly, consumer and business sentiment have remained robust since the Federal election in September 2013. State economic activity has varied widely in recent years, but is now converging as the impetus of the mining investment boom recedes.
14 | Industrial Investment Market Review and Outlook – 2014
• New South Wales consumers are responding to lower interest rates, with stronger consumption and housing activity. However, NSW’s previously strong labour market has weakened in recent months. • Victoria had a boom in housing construction earlier than other states, which is now unwinding and weighing on state growth, along with the impact of the previously high AUD on Victoria’s industry base. • Queensland has suffered from a slowing resource sector and from a State Government fiscal contraction, but stronger domestic economic drivers have offset some of the impact, and state growth remains strong relative to other states. Queensland’s previously weak labour market has also improved recently. • Western Australia, long Australia’s economic powerhouse, has slowed significantly as the resource sector consolidates. However, because it is slowing from a very high level, economic activity remains at a high level. • South Australia is suffering from similar ills to Victoria (a high dollar and contracting housing construction), which have been exacerbated by the state’s weaker population growth and the end of car manufacturing in Australia scheduled for 2017.
Occupier demand drivers The key drivers of industrial occupier demand growth will remain Australia’s consumption driven economy with highly concentrated urban centres. The logistics and freight sector will continue to be supported by strong population growth, rising import volumes and sustained consumption growth. The drivers of industrial property demand are varied and broad, which means the sector is fairly cyclical and will be among the first to benefit from increased consumer spending and housing construction. The boost from the housing sector comes not only through the direct impact on demand for construction materials, but also from its indirect impact on consumption spending and general economic activity. Undoubtedly a more significant driver of industrial property demand in Australia is the transport and storage sector. This sector saw weak growth in output of just over 1% in 2013, well below the pace of broader GDP growth. This difference reflects the weakness of the domestic economy and consumption in 2013. An improving domestic economy is expected to result in improved output for the sector, with growth forecast to increase to 2.0% in 2014 and 3.1% in 2015 (Deloitte Access Economics).
Forecast
400 300 200 100
21 20
17 20
13 20
09 20
05 20
01 20
97 19
93 19
89 19
85
0
19
We expect this focus on operational efficiency will continue to drive demand, but we expect to see a shift in size as smaller industrial occupiers pursue such a cost management strategy. This shift in the profile of demand will increasingly be supported, in our view, by a bottom-up recovery in tenant demand as domestic economic activity gains momentum.
$b current prices 500
81
Nevertheless, a large part of the industrial property demand over recent years has been from very large occupiers and has been counter-cyclical in nature. That is, many large retailers and logistics operators have responded to a slower sales environment by looking at improving their operational efficiency. Strategies around their property holdings have often been central to this efficiency drive. Modern automated warehousing and strategic location selection to minimise transport costs have been a key driver of this trend.
Figure 8: Total Goods Imports (Balance of Payments) Current Prices ($b)
19
More important for industrial sector demand is the volume of imported consumption goods. This has grown by 7.7% p.a. long term (19922012). Goods imports are forecast by Deloitte Access Economics (December 2013) to grow 5.8% p.a. in the ten years (2014-2023), suggesting goods imports will continue to be a key driver of warehouse and logistics space demand (Figure 8).
*As at Q4/2013 Source: Deloitte Access Economics, JLL Research
Industrial Investment Market Review and Outlook – 2014 | 15
E-commerce driving changes in logistics demand The rapidly expanding e-commerce sector is driving a wave of demand growth in Australia, changing the way retailers choose and use real estate, from distribution centres to stores. Led by e-commerce operators and offshore retailers, international corporates will seek a domestic distribution centre network, often looking for a high degree of flexibility as they grow their operations. Due to technological advancements, social media platforms, globalisation and the focus on cost, consumers have significantly changed how they shop, how they make purchasing decisions and what they expect from retailers. Purchasing channels including mobile devices, online and in- store are blurring. This multichannel approach is changing the way retailers choose and use real estate, from distribution centres to stores. Retailers must make significant investments in real estate and technology that unifies their supply chain process – spending on upgrading real estate and technology is the enabler. We expect ongoing rationalisation in the retail sector in Australia in which mature retailers look closely at their existing store locations and distribution methods and online retailers grow in significance. E-commerce retailers will utilise the following key site selection criteria:
– Andrew Maher, National Director, Corporate Industrial Solutions 16 | Industrial Investment Market Review and Outlook – 2014
10 year annual average
2,000 1,500 1,000 500
*As at Q4/2013 Includes take-up of traditional & high-tech space Source: JLL Research
* 13 20
11
12 20
20
10 20
09
08
20
20
07
20
06
0
20
This trend has been evolving over the last five years. International retailers entering the Australian market will need a supply chain solution to service their clients, customers and stores. International retailers will seek a domestic distribution centre footprint or engage 3PL providers for local distribution – either solution will result in greater demand for industrial space.
2,500
05
Australia has a low penetration of international retailers for a mature economy. The internationalisation of the retail sector will see more major regional and international brands enter the Australian market to grow their market share.
SQM ('000s)
3,000
20
Combined with the ongoing push for efficiencies from all occupiers, we expect the rapidly growing e-commerce sector to drive a new wave of activity.
Figure 9: Gross Take-up in Major Capital City Markets
04
Real estate functionality to efficiently handle large volumes of small orders; expansion requirements due to fast growing nature of online retail business; optimum building layout for e-commerce operations.
20
•
03
Location attributes allowing fast and efficient movement of goods such as the proximity to major postal mailing centres; zoning allowing 24-hour operation and multiple night time vehicle movements;
20
•
Figure 10: Gross Take-up by Industry Sector in 2013 1%
1%
2% 3%
Transport and Storage Wholesale Trade
4%
Manufacturing
8%
31%
Retail Trade Unknown or Other 12%
Property and Business Services Construction Government Administration and Defence
16% 22%
Communication Services Mining
Source: JLL Research
Occupier activity Occupier demand has been supported by organic business growth and a low tolerance of locational obsolescence or functional obsolescence and this is resulting in more activity. Occupiers look to take advantage of infrastructure improvements made during their previous lease term, as well as changes to their customer or suppliers locations. Gross take-up of 1.98 million sqm was recorded in 2013 (Figure 9). With take-up averaging 2.01 million sqm in the 10 years to 2012, takeup was around average last year (some upward revision to 2013 takeup is expected as new deals are announced to the market in 2014). For the year, take-up was below average in the major east coast cities, while well above average in Perth and comfortably above average in Adelaide. Take-up in Sydney reached only 84% of its long-run average, while in Perth take-up was 70% above the average (though it should be noted that Perth take-up in 2013 was in line with the previous three years).
The Transport and Storage Industry (logistics and freight sector) accounted for 31% of take-up in 2013, supported by rising import volumes and benefitting from outsourcing to 3PLs by major retail groups. The Wholesale Trade sector accounted for 22% of take-up, followed by Manufacturing with 16% and the Retail Trade sector with 12% (Figure 10). Mining contributed to a negligible 1% of national gross take-up and only 5% of take-up in Perth in 2013.
Construction activity and new supply The industrial development sector at present is dominated by a small number of institutional groups with established land banks. A number of larger private developers and boutique groups are also competing for development opportunities. One of the most notable impacts of the Global Financial Crisis has been the rapid reduction in industrial construction activity. Since 2008 new supply has been below the 10 year annual average and in 2013 was approximately 50% below the peaks of 2007 and 2008. JLL sees this as a return to more ‘normal’ market conditions. A return to the activity levels of 2007-8 is unlikely due to the confluence of factors that drove that activity prior to the GFC.
Industrial Investment Market Review and Outlook – 2014 | 17
Figure 11: Construction Pipeline - Major Projects in Capital City Markets SQM ('000s)
3,000 2,500
10 year annual average
2,000 1,500 1,000 500
20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 * 20 15 *
0
Despite a sharp reduction in volume, the development market is very active at present. Figure 11 shows that approximately 1.2 million sqm of new supply was completed in 2013 nationally (major projects). A further 1.26 million sqm is under construction and scheduled to complete in 2014, with approximately 76% of that due in the first half of the year. A further 711,000 sqm of projects currently have planning approval, heavily weighted toward the second half of 2014, suggesting that if occupier pre-commitments can be secured for those projects, construction in 2014 could exceed 2 million sqm for the first time since 2008. The major pre-lease development market remains highly competitive in East Coast cities and an increasing number of major developers are engaged as activity again recovers. As a result of fairly tight demand and supply fundamentals, resulting in minimal vacancy in modern warehouse properties, developers have been speculatively developing generic, adaptable warehouse product. Table 1 identifies recent construction trends by market. Melbourne remains the clear standout for speculative construction: only 61% of property under construction at the end of 2013 had known occupier commitments. Furthermore, Melbourne has overtaken Sydney as having the largest total area of new stock under construction.
18 | Industrial Investment Market Review and Outlook – 2014
Completed Under Construction 10 year annual * As at Q4/2013 Includes traditional & high-tech projects
Plans approved / submitted
Source: JLL Research
Table 1: Development Pipeline* – as at Q4/2013* Completed Year to Q4/2013 (sqm)
Development Pipeline (sqm)*
Pre-absorption Rate (%)*
Sydney
413,300
390,500
91
Melbourne
326,800
423,700
61
Brisbane
231,600
299,800
81
Perth
160,700
129,000
88
Adelaide
50,900
70,000
100
Total
1,183,300
1,307,300
79
* Development pipeline includes all projects under construction in Q4/2013 Source: JLL Research
Tenants more demanding
Rental conditions
Since the Global Financial Crisis (GFC), there has been a strong focus by occupiers on cost minimisation and supply chain efficiencies. Occupiers are using real estate location and specification to execute supply chain strategy, with greater demand being placed on landlords to make the case for their real estate location and building specification to the individual user.
The market fundamentals of steady demand and below average supply, as well as the ongoing renewal and infill of older industrial precinct, are supportive of low market vacancy and steady rents for existing stock. JLL expects that prime grade net face rents will broadly track inflation over the forecast period, averaging 2.0% to 3.0% per annum over the cycle.
More recently, occupiers are demanding higher incentives and shorter lease terms or staged growth options to drive flexibility in new leases. There has also been a notable increase in the time required to negotiate a new lease or lease renewal, with existing tenants engaging their landlords earlier in the renewal process. Retention rates for institutional landlords have surged since 2007 and remain elevated. Overall the decision making process is being extended due to greater corporate uncertainty, with ‘stay put’ high on the agenda of many tenants and their existing landlords working harder to retain them. Secondary asset owners looking to renew leases with existing tenants or secure new tenants will be required to adjust to these changing dynamics in the leasing market. – Richard Fennell, Head of Property and Asset Management, Australia
However, prime grade existing face rents were fairly stable in 2013 outside of the most supply constrained markets, such as South Sydney (Figure 12). In most markets, a competitive pre-lease environment and healthy level of construction is limiting rental growth in existing stock. This is expected to continue in the short term. Of the markets that JLL forecasts, only South Sydney is expected to record growth in net face rents in 2014. With incentives broadly rising through 2013, effective rents have softened marginally. Figure 12: Industrial Prime Net Face Rental Growth in 2013 Adelaide - Outer North Adelaide - North West Adelaide - North East Adelaide - Inner West-E Adelaide - Inner South Perth - South Perth - North Perth - East Brisbane - Northern Brisbane - Southern Brisbane - Trade Coast Melbourne - West Melbourne - South East Melbourne - North Melbourne - City Fringe Sydney - Outer South West Sydney - Outer North West Sydney - Outer Central West Sydney - Inner West Sydney - North Sydney - South –6% –4% –2%
0%
2%
4%
6%
8%
Source: JLL Research
Industrial Investment Market Review and Outlook – 2014 | 19
The investment market themes in 2014
We assess that five key criteria will be central to the determination of investment decisions in 2014: 1. Yield 2. WALE 3. Scale 4. Growth 5. Portfolio reweighting
The hunt for yield (a given in the sector) Industrial yields commenced a gradual downtrend late in 2012 and they remain in this trend, accelerating since mid-2013 in line with strong sales evidence. As outlined earlier, prime grade industrial property yield spreads to the inflation-indexed Commonwealth government bond rate suggest there is limited further room for property yield compression before property could be considered priced above “fair value”. Our expectation based on current market evidence is that asset pricing will push through this historic threshold level in the next few quarters. Does this imply that prime grade industrial property is expensive? We would argue that this historic threshold level should be set lower as the industrial sector is once again re-rated by the market – arguably justifiable because of its unique characteristics: longer average lease terms, lower management intensity, fixed rental escalations, higher entry yields, transactional liquidity, rising institutional ownership and a high calibre occupier base.
20 | Industrial Investment Market Review and Outlook – 2014
The industrial sector continues to offer a yield premium to the office and retail sectors; an above benchmark premium to the real bond rate; and a premium to global industrial markets. As a result, investment volume is likely to be well supported on the buy side. Further yield compression is forecast to support valuations in the near term. Yield compression is expected to be supported by (a) the weight of capital looking for high yielding assets; (b) a continuation of the long-term re-rating of the industrial sector reflecting the changing tenant and investor profiles; (c) the spread to real bond rates; and (d) the wide yield spread between Australian and offshore industrial markets. For capital markets, asset pricing will be interesting in 2014. Unlike other countries where property yields have followed bond yields to abnormally low levels over recent years, Australian property yields have seen much less compression. Prime yields are close to 10year average levels (Table 2) and secondary markets in Sydney and Melbourne are still well above 10-year average levels (Table 3). Consequently, the big question in 2014 is: will Australian property yields tighten further in the face of rising bond yields? We expect that in some cases the strong weight of local and international capital looking for a home will cause further downward pressure on yields, and if transaction activity announced to the market early in 2014 is a reliable guide, yields may compress more rapidly than presently being forecast.
Table 2: Industrial Markets – Prime Equivalent Yields Market/Precinct
Table 3: Industrial Markets – Secondary Equivalent Yields
Prime Equivalent Yields Current (%)
10-Year Average (%)
Sydney South
7.50 - 8.25
7.85
2
Sydney North
8.25 - 8.75
8.11
39
Sydney Outer Central West
7.75 - 8.25
8.06
Sydney Outer South West
8.00 - 9.00
Sydney Outer North West
Market/Precinct
Secondary Equivalent Yields Current (%)
10-Year Average (%)
Spread (bp)
Sydney South
9.00 - 9.75
8.81
56
Sydney North
9.75 - 10.75
9.26
99
-6
Sydney Outer Central West
9.25 - 10.75
9.32
68
8.42
8
Sydney Outer South West
9.75 - 11.25
9.58
92
7.75 - 8.75
8.21
4
Sydney Outer North West
9.00 - 11.00
9.32
68
Sydney Inner West
7.75 - 8.50
8.09
4
Sydney Inner West
9.50 - 10.50
9.10
90
Melbourne West
7.50 - 8.25
8.16
- 28
Melbourne West
9.50 - 10.25
9.34
53
Melbourne South East
7.50 - 8.00
8.15
- 40
Melbourne South East
8.75 - 10.00
9.17
20
Melbourne North
8.00 - 9.00
8.37
13
Melbourne North
9.50 - 10.00
9.24
51
Melbourne City Fringe
7.75 - 8.25
7.91
9
Melbourne City Fringe
8.25 - 9.00
8.61
1
Brisbane Southern
7.50 - 8.00
7.95
- 20
Brisbane Southern
9.00 - 10.50
9.40
35
Brisbane Trade Coast
7.50 - 8.00
7.92
- 17
Brisbane Trade Coast
8.50 - 9.75
9.15
-3
Brisbane Northern
7.50 - 8.00
8.10
- 35
Brisbane Northern
8.75 - 10.25
9.32
18
Perth East
7.75 - 8.25
7.98
2
Perth East
8.25 - 8.75
8.95
- 45
Perth South
7.75 - 8.25
7.98
2
Perth South
8.25 - 8.75
8.95
- 45
Perth North
7.75 - 8.25
7.98
2
Perth North
Adelaide Inner South
8.25 - 9.25
*
*
Adelaide Inner South
Adelaide Inner West-E
8.00 - 9.00
8.85
- 35
Adelaide North East
8.25 - 9.50
*
*
Adelaide North West
8.25 - 9.50
8.90
Spread (bp)
8.25 - 8.75
8.95
- 45
10.00 - 10.75
*
*
Adelaide Inner West-E
9.75 - 10.50
10.69
- 56
Adelaide North East
10.00 - 11.00
*
*
-3
Adelaide North West
10.00 - 11.00
*
*
10.50 - 12.00
*
*
Adelaide Outer North
8.25 - 9.75
*
*
Adelaide Outer South
Adelaide Outer South
8.50 - 10.00
9.17
8
* The time series for this market is less than ten years
* The time series for this market is less than ten years Source: JLL Research
Source: JLL Research Industrial Investment Market Review and Outlook – 2014 | 21
The hunt for WALE A-REITs and wholesale fund managers are focusing on enhancing their portfolio Weighted Average Lease Expiry (WALE) as a point of difference and competitive advantage. Clearly there is some impact on access to longer term funding and the cost of that debt funding due to the length of a portfolio’s WALE (Figure13). There has been a strong shift in the focus of investor groups with lower portfolio WALE to extend or enhance this through targeted acquisitions of assets offering longer income streams. As a result, this WALE attracts greater attention as an investment decision criterion for those groups. This will be important for corporates looking to divest assets from their balance sheets in a sale-and-leaseback process and considering optimal structured for lease tenure and rental escalation. This also presents an opportunity for groups with longer WALE to moderately dilute WALE as a trade-off to acquire assets with higher initial yields, while still maintaining solid fundamentals due to location, specification and adaptability. Examples include specialised facilities such as regional distribution centres with lower WALE (but strategic location for the user, development extension land and sunken capital in plant and machinery).
Figure 13: Industrial Funds - WALE as at June 2013 Weighted Average Lease Expiry - June 2013 *Charter Hall Direct Industrial Fund No.2 (DIF2) *Core Logistics Partnership *Charter Hall Direct Industrial Fund No.1 (DIF1) *Core Plus Industrial Fund Mirvac Group Growthpoint Australand Australian Industrial REIT *Goodman Australia Industrial Fund Industria REIT GPT Group 360 Industrial REIT Dexus Abacus Property Group *Goodman Trust Australia Stockland Goodman Group 0
Source: Company Data
22 | Industrial Investment Market Review and Outlook – 2014
2 4 6 Years (by income)
8
10
12
14
The hunt for scale There has been a notable increase this year in the number of investor groups with active mandates for higher value assets of > AUD 50.0 million. Given average capital values are generally between AUD 1,000 and AUD 1,200 per square metre for industrial warehouse space, assets greater than AUD 50.0 million are generally regional distribution centres for supermarket chains or facilities specialised in some other way that increases the economic rent. The increase in mandates for larger assets suggests that investors have become more comfortable with the valuation challenges these properties can present. As Figure 14 shows, excluding residential redevelopment site sales, there were only 13 sales above AUD 40.0 million in 2013 (9 of which transacted in Q4) and only 8 sales between AUD 30.0 million and AUD 40.0 million (3 transacted in Q4). While the number of these assets is limited, there has been an increase in the number of groups looking to acquire scale in the sector and scalable assets for their investors. This theme was evident in the fourth quarter of 2013 and is expected to continue in 2014.
Figure 14: Industrial Investment and Development Land Sales 2013 by Price Cohort # of sales transacted in cohort 70 60 50 40 30 20 10 0
< 10.0
10 to 19.99
20 to 29.99
30 to 39.99
> 40.0
Calendar year 2013 Sales $5 million. Does not include residential redevelopment site sales. Source: JLL Research
There is a first mover advantage in acquiring larger stabilised assets, as they will generally be held long-term, rather than used as trading style opportunities. Investors have clearly taken notice of the scarcity value of large format investment product – 12 of the total 21 investment sales above $30 million occurred in Q4/2013. Charter Hall funds purchased 4 of the 13 assets over AUD 40.0 million in 2013 and have recently announced contracts have been exchanged on another in Melbourne. Other large funds dominating large format asset purchases were Goodman, Stockland, Aviva, Mirvac, The GPT Group, DEXUS and CorVal.
Industrial Investment Market Review and Outlook – 2014 | 23
Growth and product scarcity (the hunt for product)
Figure 15: Industrial Sales by Purchase Type
Despite rising transaction volumes each year since 2008, the current investment market still presents a scarcity challenge for investors. Depending on an investor’s mandate, access to funding and cost of funding, they will be precluded from certain types of transactions. For example, properties priced above or below a certain threshold; properties offered for sale as part of a portfolio; properties sold to related parties or into development joint venture funds; properties with short term leases or vacancy challenges; properties in non-core locations; or properties with unusual building specifications.
AUD (Millions) 3,500
For investors looking to accumulate a portfolio by buying individual assets, applying the most simple criteria of assets priced above AUD 10.0 million, sold as investment style (no immediate development angle) in suburbs considered traditional industrial locations and not offered to related parties or as part of larger portfolios, less than half of all sales in the past three years can be could be considered ‘opportunities’ (Figure 15). Applying further criteria, such as WALE, occupier type, asset type, grade, design, market weighting and allocation, results in fewer and fewer ‘opportunities’ to build a portfolio.
3,000 2,500 2,000 1,500 1,000 500 0
2011 Opportunities
2012 Portfolio
Sub $10m
Non-Core
Owner Occ
Resi Site
2013 Related Party
Sales ≥ $5 million as at February 2014 Source: JLL Research
Figure 16: Industrial Investment Universe Market Weights (by value) December 2013
This is creating challenges for investors that have committed to growing their funds under management in the industrial sector, particularly by acquisitions.
9%
4%
A key challenge for investors in 2014 will be how they deploy capital to access product and build a portfolio, while meeting other challenges such as reweighting by geography, increasing portfolio WALE and finding higher yielding assets that remain accretive.
43%
18%
Reweighting portfolios a priority Reweighting of portfolios by geography will be a particular challenge for investment or development businesses originally domiciled in a single market. Figure 16 depicts JLL’s estimates of the industrial investment universe by value for each major market. Most groups typically hold an overweight position in Melbourne or Sydney; and most groups are also underweight in Brisbane and are actively trying to remedy this through acquisitions. While most funds are also underweight in Perth, for many investors Perth is in the ‘too hard basket’. Another question for institutional funds will be whether to try to follow a market weighting by value or by area (sqm). This is particularly relevant in assessing exposure to the Melbourne market, where average capital values can be significantly lower than in Sydney and Brisbane. A further question will be whether to actively target stabilised properties, or reweight via increasing development pipeline in an underweight market (though this challenge is unique to investors with a development capability and focus).
24 | Industrial Investment Market Review and Outlook – 2014
25%
Sydney
Melbourne
Source: JLL Research
Brisbane
Adelaide
Perth
Opportunities There are many opportunities for investors and developers. We have highlighted a few key opportunities based on the investment market themes and challenges for 2014 outlined above. 1. Target the asset creators or become one yourself 2. Consider sale-and-leaseback options. 3. Investigate possible mispricing of risk in non-standard or specialised assets 4. Aggregate secondary assets 5. Private investors may look to sell into a strong pricing cycle 1. Development groups have been the key source of investment opportunities in the last four years. However, astute investors recognised this opportunity a few years ago and have forged development JV funds with partners such as Goodman, DEXUS and Australand. With Australand recently revising its strategy and deciding to hold more of its industrial development product on balance sheet (essentially switching from being a net seller to a net buyer), pressure will increase on investors to source product with core style characteristics from the remaining developers without an investment focus. As a result, we expect more groups to increase their development capability and re-enter the market for development land to grow their portfolios. Recent examples include Mirvac, Stockland and The GPT Group.
2. The rationale for corporates to undertake sale-and-leaseback strategies is usually straight forward: divest a non-income producing asset from the balance sheet to free up capital that can be put to work elsewhere in the business. There are two common types of corporates that are likely to undertake sale-and-leaseback transactions: a) transport and logistics companies that moved into new precincts to develop purpose-built assets and b) manufacturers, food processors or retailers that required a higher than normal level of building specification at the time of development. Both of these groups have a form of commonality. The properties are likely to be in some way specialised or unique to the user that built them. The difficulty for investors will be identifying these opportunities and the assets that do not offer some other form of economic value to the business operations and therefore would not be considered for sale. The current investment environment presents an opportunity for corporates looking to free up cash from property assets. We appear to be heading toward a trough in the yield tightening cycle. The leasing market is fairly competitive. And there is an abundance of capital seeking investments with long WALE, quality covenant and scale, the attributes most common in well-structured corporate sale and leaseback programs.
Industrial Investment Market Review and Outlook – 2014 | 25
3. Specialised assets have been identified as a key investment opportunity in 2014 for three reasons: firstly, specialised assets often offer the key characteristics that today’s investors are seeking; secondly, many investors who have traditionally avoided these opportunities now realise that investment ‘opportunities’ are becoming scarce; and thirdly, we believe there is often an overstatement of the risk involved in owning a specialised asset – largely because the capital sunk in the asset by the occupier and the strategic location selected by the occupier mitigate their risk. 4. Secondary assets allow investors to aggregate a larger portfolio and avoid competition for the prime grade, core assets. The investment proposition for many secondary grade assets is sound. Some secondary grade asset re-pricing occurred in 2013. Further tightening in secondary grade yields is possible in 2014 because: a. Average secondary grade yield spreads to prime grade assets are historically very high. b. More investors have gone up the risk curve. Sentiment toward both value-add investing and the industrial sector as an asset class has shifted favourably. c. The sell down of ‘non-core’ assets by institutional investors is completed. Meanwhile, private investors – while net sellers in 2013 – have not yet been convinced that the pricing metrics are optimal for disposing of assets. We expect this to change in 2014 as evidence of yield tightening builds. Investors may accept a shorter lease expiry profile for a good building in a good location; or decide a poor building in a good location with a strong covenant and long WALE is preferable. We generally don’t expect firmer pricing for assets that are only strong on one of these criteria. 5. Private investors have been net sellers of industrial property in the last two years. We expect private owners to be enticed to sell a) by evidence of a strong pricing cycle, delivering them attractive capital returns - after taxes and fees and b) by the prospect of having to offer up-front cash or rentfree incentives to compete for tenants in a patchy occupier demand environment.
26 | Industrial Investment Market Review and Outlook – 2014
Specialised assets – worth the ‘risk’ The Australian industrial market saw a number of sales of specialised facilities in 2013. Is this due to the lack of more generic investment offerings or are other factors at play? I tend to think there are other drivers. Before we examine these let’s determine what constitutes a specialised industrial facility? It is a facility that has a specific use for a specific user, with little or no adaptive reuse potential. Examples of specialised facilities include data centres, cold storage and food processing facilities. Specialised industrial facilities tend to be offered with long term leases, as they are either sale-and-leaseback offerings, or have been committed to by a tenant seeking long term security of tenure in the facility. A unique feature of specialised facilities is that the plant and equipment is often worth many multiples of the actual building envelopes. This is one of the key attractions for investors. It is generally a good guide to the likelihood of a tenant remaining in the facility for the long term, well beyond the initial lease period of 15 or 20 years, because it would be cost prohibitive to move earlier. Tenants in generic warehouse and distribution facilities are more mobile due to the availability of comparable facilities and the relatively low cost of relocating and commissioning a new facility. When buying a specialised industrial facility, however, basic investment principles still apply. The location should be considered prime. Ultimately the building will be obsolete, so you are better off with a prime piece of land that can be redeveloped into a higher and better use. The tenant should also operate in a sustainable, preferably growing, industry. For example, food-grade facilities are today more attractive than car manufacturing plants. – Michael Fenton, Managing Director, New South Wales; Head of Industrial Services – Australia
Unlisted capital set to continue targeting non-core industrial 2013 saw strong capital flows into Australian unlisted funds across all sectors. Established Australian managers enjoyed success in attracting capital from Australian and offshore institutional investors for their unlisted wholesale offerings. Demand from unlisted wholesale investors remains unsatisfied and a number of domestic and offshore institutions indicate continued demand and capacity for investment in Australian industrial real estate. We continue to see increased evidence that institutional investors are prepared to take on additional risk with capital available for core plus and value add industrial strategies. A number of Australian superannuation funds have now awarded mandates to managers for core-plus investment across a range of sectors. For global wholesale fund investors the growing importance of the Asia Pacific region has driven more active investment in Australia as it offers a large, mature and transparent market in contrast to the opportunistic style investment available in some emerging property markets across the region. Investor demand and the lack of core stock in Australia will likely see fund managers more active in non-core industrial. In the absence of exposure to core assets, stable income flows are key for wholesale investors. Well located modern assets with some manageable leasing risk will likely be popular targets as fund investors will accept short term challenges to secure high quality, well located assets for the longer term. – Chris Key, Head of Corporate Finance, Australia – Kivanch Mehmet, Director - Corporate Finance, Australia
Industrial Investment Market Review and Outlook – 2014 | 27
2013 INDUSTRIAL TRANSACTIONS 28 | Industrial Investment Market Review and Outlook – 2014
Street Number
Street Name
Suburb
Sub-precinct
Month
Sale Price
Share
Vendor
Purchaser
New South Wales 180
Bourke Road
Alexandria
South Sydney
Dec
$343,000,000
100
Rathdrum Properties
Goodman Australia Industrial Fund
19-33
Kent Rd
Mascot
South Sydney
Apr
$100,000,000
100
Goodman Trust Australia (GTA)
Karimbla Properties No.34 - Meriton Group
40-88
Forrester Road
St Marys
Outer North West
Dec
$72,850,000
100
Goodman Australia Industrial Fund (GAIF)
Stockland
52-58
Lisbon Street
Fairfield
Outer Central West
Nov
$65,000,000
100
Blackstone Morgan Stanley
Aviva Investors
Eastern Creek
Outer Central West
Feb
$62,600,000
100
Brickworks
Goodman/Brickworks (Joint Venture Industrial Property Trust)
60
Wallgrove Road
Eastern Creek
Outer Central West
Dec
$55,000,000
100
Department of Agriculture
Mirvac Group
200
Coward Street
Mascot
South Sydney
Jun
$47,000,000
100
Queensland Local Government Superannuation Board
Meriton Group
38
Pine Road
Yennora
Outer Central West
Oct
$43,600,000
100
Kingsmede
GPT Group
South St
Rydalmere
Inner West
Aug
$43,250,000
100
DEXUS Property Group
Kingsmede
Dunning Ave
Rosebery
South Sydney
Dec
$37,400,000
100
Undisclosed or Unknown
Goodman Australia Industrial Fund
4
Inglis Road
Ingleburn
Outer South West
Jun
$34,350,000
100
Maremma Pty Ltd (Toll)
DEXUS Wholesale Property Fund
55-57
Kirby Street
Rydalmere
Inner West
Feb
$32,000,000
100
Uniting Church
Fife Capital
31-37
Heathcote Rd
Moorebank
Outer South West
Mar
$30,250,000
100
PMP Print Pty Ltd
Goodman Group
Glendenning Road
Glendenning
Outer North West
Oct
$29,500,000
100
Greens General Foods
Fife Capital
1-11
Smeaton Road
Smeaton Grange
Outer South West
Apr
$27,500,000
100
Undisclosed or Unknown
Stella
Lot 3
Kangaroo Avenue
Eastern Creek
Outer Central West
Oct
$25,443,000
100
Australand
Kuehne + Nagel
100
Bennelong Road
Homebush Bay
Inner West
Feb
$25,400,000
100
Centuria Property Fund
Meriton Group
Talavera Road
North Ryde
North
Aug
$25,300,000
100
DEXUS Property Group
Undisclosed or Unknown
Swinbourne Street
Botany
South Sydney
Mar
$23,163,000
100
Macquarie Group
Goodman Group
Reservoir Road
Greystanes
Outer Central West
Sep
$23,000,000
100
Undisclosed or Unknown
Americold
350
Edgar Street
Condell Park
Outer South West
Dec
$22,800,000
100
AMP Capital
Ambot Pty Ltd
32
Swinbourne Street
Botany
South Sydney
Mar
$22,200,000
100
Quantum Park Botany Pty Ltd
GIL Holdings (Aust) Pty Ltd
74
Newton Road
Wetherill Park
Outer Central West
Jul
$22,000,000
100
Undisclosed or Unknown
Fife Capital
Forrester Road
St Marys
Outer North West
Aug
$21,200,000
100
Arrium Limited
Charter Hall Direct Industrial Fund No. 2 (DIF2)
Bourke Street
Alexandria
South Sydney
Jun
$21,196,000
100
F.Hannan Properties Pty Ltd
Whistle-On-Bourke Pty Limited
Britton St
Smithfield
Outer Central West
Jul
$20,139,610
100
Undisclosed or Unknown
Altis Property Partners
Percival Rd
Smithfield
Outer Central West
Dec
$19,200,000
100
Cromwell Property Group
Undisclosed or Unknown
15
Cooper Street
Smithfield
Outer Central West
Mar
$19,000,000
100
Undisclosed or Unknown
Crown Fork Lifts
457
Waterloo Rd
Chullora
Inner West
Jun
$17,200,000
100
Colonial Direct Property Investment Fund
360 Capital Industrial Fund
9
Coventry Place
Mount Druitt
Outer North West
Nov
$16,750,000
100
Australian Unity
Private investor
15
Huntingwood Drive
Huntingwood
Outer North West
Jun
$16,200,000
100
Woolworths Limited
Charter Hall Group
2-6
Basalt Road
Greystanes
Outer Central West
Feb
$15,478,000
50
DEXUS Property Group
National Pension Service of Korea
154
O'Riordan St
Alexandria
South Sydney
Jul
$14,500,000
100
DEXUS Funds Management
DEXUS Projects Pty Ltd.
184-194
Milperra Road
Revesby
Outer South West
Dec
$13,950,000
100
196 Milperra Rd Pty Ltd
Undisclosed or Unknown
13
Ferndell Street
Granville
Inner West
Apr
$13,500,000
100
Arrium Limited
Sentinel Property Group
39
Rhodes Street
Hillsdale
South Sydney
Aug
$12,200,000
100
Undisclosed or Unknown
JKN Rhodes Pty Ltd
3
Distillers Place
Huntingwood
Outer North West
Jun
$11,100,000
100
LaSalle Australia Core Plus Fund
Altis Property Partners
111
Quarry Road
Erskine Park
Outer Central West
Jul
$10,661,700
100
CSR Ltd
Murray Goulburn Co-Operative Co-Ltd
8-12
Wiggs Road
Riverwood
South Sydney
Sep
$9,700,000
100
Hills Holdings
Undisclosed or Unknown
2
Apollo Place
Lane Cove
North
Jun
$9,200,000
100
Aspen Diversified Property Fund
Denison Diversified Property Fund
Long Street
Smithfield
Outer Central West
Sep
$8,977,000
100
Transgrid
Charter Hall Core Plus Industrial Fund (CPIF)
McEvoy Street
Waterloo
South Sydney
Nov
$8,620,000
100
Nemkal Pty Ltd and Pondliners Pty Ltd
Undisclosed or Unknown
King Street
Mascot
South Sydney
Mar
$8,550,000
100
Gate Gourmet Property Pty Ltd
Balaji & Family Property Pty Limited
10
Solent Circuit
Baulkham Hills
Outer North West
Jun
$7,600,000
100
Print Management Holdings Pty Ltd
Flexco Australia Pty Ltd
73-79
Beattie Street
Balmain
Inner West
Dec
$7,400,000
100
Peter Owen Developments Ltd
Undisclosed or Unknown
3
Apollo Place
Lane Cove
North
Jun
$7,000,000
100
Aspen Diversified Property Fund
Denison Diversified Property Fund
1
Clyde St
Silverwater
Inner West
Jun
$6,962,288
100
Graebar Properties
Crei Industrial Nominees No.1
2/122
Euston Road
Alexandria
South Sydney
Jul
$6,200,000
100
Coulson
Alexandria Euston Pty Ltd
95-99
Reserve Rd
Artarmon
North
Aug
$6,200,000
100
Roluke Pty Ltd
Health Administration Corporation
25
Bessemer Street
Blacktown
Outer North West
Sep
$6,000,000
100
GW Properties Pty Ltd
L & B Management Pty Ltd
9
Parramatta Road
Lidcombe
Inner West
Sep
$5,900,000
100
Undisclosed or Unknown
GLNS Superannuation Fund
34
Williamson Road
Ingleburn
Outer South West
Jul
$5,825,000
100
Cronulla Pty Ltd
Pennells Property Group Pty Limited
4-14
Dickson Avenue
Artarmon
North
Nov
$5,800,000
100
George Bevan
J & S Pang Pty Ltd
293-295
Abercrombie Street
Darlington
Inner West
Nov
$5,400,000
100
Undisclosed or Unknown
Whiteline Clothing
20-24
Rodborough Road
Frenchs Forest
North
Jul
Part of a portfolio
100
GE Capital Real Estate
Blackstone
10-16 131-151
29
40-52 47 554-562
10-38 126-134 53 28-54
10-20 263-273
2013 INDUSTRIAL TRANSACTIONS Street Number
Street Name
Suburb
Sub-precinct
Month
Sale Price
Share
Vendor
Purchaser
Hume Highway & Tranport Drive Heidelberg Road Dunmore Drive Saintly Drive Frederick Road Fulton Drive Lorimer Street Centre Road Drake Boulevard Stanley Drive Australis Drive Studley Court Browns Road Southern Court Springvale Road Atlantic Drive Franklin
Somerton
North
Nov
$121,000,000
Fairfield Truganina Truganina Tottenham Derrimut Port Melbourne Clayton South Altona Somerton Derrimut Derrimut Clayton Keysborough Mulgrave Keysborough Melbourne
North West West City Fringe West City Fringe City Fringe West North West West South East South East South East South East City Fringe
Jun Dec Dec Dec Dec Jul Dec Jul Oct Dec Jun May Jul Jun Jul Nov
$120,000,000 $47,640,000 $41,713,000 $39,075,000 $29,150,000 $26,300,000 $25,300,000 $24,130,000 $23,700,000 $20,950,000 $20,000,000 $19,550,000 $18,760,000 $18,700,000 $17,349,000 $17,000,000
100
Hunt Family
Charter Hall Group
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Amcor Montague Cold Storage Australand Cromwell Property Group Undisclosed or Unknown Australian Unity Sigma Pharmaceuticals Australand Motor Accident Commission (SA) Peter Wu Undisclosed or Unknown PMP Limited Australand Aspen Diversified Property Fund Australand Jimmy Goh
Alpha Partners CorVal Charter Hall Core Logistics Partnership (CLP) Charter Hall Group PropertyLink Centennial Property Group Cedar Woods Growthpoint Properties Australia Fife Capital Abacus Property Group 360 Capital Industrial Fund Abacus Property Group Growthpoint Properties Australia Denison Diversified Property Fund Growthpoint Properties Australia Chris Jian
Dandenong
South East
Sep
Salmon Street William Angliss Drive Merrindale Drive Settlement Road Commercial Drive Howleys Road
Port Melbourne Laverton North Croydon Thomastown Dandenong Notting Hill
City Fringe West South East North South East South East
Mar Jun Nov Aug Aug Nov
$15,000,000
100
Places Victoria
Ego Pharmaceuticals
$12,143,000 $10,500,000 $10,250,000 $10,000,000 $9,575,000 $9,300,000
100 100 100 100 100 100
Strategic Undisclosed or Unknown Undisclosed or Unknown Undisclosed or Unknown Property Advisory Group Undisclosed or Unknown
Victoria Somerton Logistics Park Amcor Paper Mill Site 7 2-30 5-29 45 704-744 1408-1418 9-11 24 169 69 31-49 19 & 20 677 229-241 LOGIS industrial park - Ego Pharmaceuticals 18-22 119-121 360-366 32-36 40-48 Lots 22-26
Industrial Investment Market Review and Outlook – 2014 | 29
342-368 297-303 1-11 86-102 12-20 120 28-40 16-18 16-18 11
Vision Street
Dandenong South
South East
Mar
$8,942,973
100
Hammond Road Palmers Road Remington Drive Whiteside Road Arkwright Drive Colemans Road Vella Drive Waverley Lionel Road Dansu Court
Dandenong South Truganina Dandenong South Clayton Dandenong South Carrum Downs Sunshine Mount Waverley Mount Waverley Hallam
South East West South East South East South East South East West City Fringe South East South East
Apr Mar Oct Jul Dec Jul Apr Dec Nov Feb
$8,250,000 $7,740,000 $7,500,000 $7,200,000 $6,660,000 $6,600,000 $6,180,000 $5,050,000 $5,050,000 $5,000,000
100 100 100 100 100 100 100 100 100 100
AMP Capital Qanstruct Aspen Group Wellington Capital The Comfort Group Undisclosed or Unknown Pellicano Group 50% / ISPT Development and Opportunities Funds No. 1 (DOF 1) 50% Castricum Australian Securities Limited Anrose Investments Undisclosed or Unknown Undisclosed or Unknown Bank of Queensland Australian Unity Undisclosed or Unknown Undisclosed or Unknown Undisclosed or Unknown
Quarry Road Lytton Road Southlink Street Nudgee Road Holt Street Brandl Street Logistics Place
Stapylton Hemmant Parkinson Hendra Pinkenba Eight Mile Plains Larapinta
Southern Trade Coast Southern Northern Trade Coast Southern Southern
Oct Dec Aug Oct Dec Apr Jun
$44,500,000 $39,630,000 $34,250,000 $27,400,000 $25,375,000 $22,590,000 $21,030,000
100 100 100 100 100 100* 100
Insight Logistics Park Pty Ltd Undisclosed or Unknown Undisclosed or Unknown Millenium Industrial Pty Ltd Cromwell Property Group Peet Income Property Fund McPhee Distribution Services
GPT Group DEXUS Wholesale Property Fund PropertyLink DEXUS Wholesale Property Fund Charter Hall Core Plus Industrial Fund (CPIF) Benlee Property Trust No. 6 GIC
Gosport Street Cobalt Street Old Gympie Road Peterkin Street Macarthur Avenue Grindle Road Bradman Street Boniface Street Burnside Road Coulson Street Industrial Avenue
Darra Hemmant Carole Park Dakabin Acacia Ridge Pinkenba Wacol Acacia Ridge Archerfield Stapylton Wacol Wacol
Southern Trade Coast Southern Northern Southern Trade Coast Southern Southern Southern Southern Southern Southern
Jul Jul May Jun Aug Nov Jun Oct Dec Aug Apr Jul
$17,500,000 $14,900,000 $14,475,500 $14,000,000 $13,750,000 $13,037,272 $12,400,000 $11,500,000 $11,000,000 $10,000,000 $9,000,000 $9,000,000
100 100 100 100 100 100 100 100 100 100 100 100
Boral Limited LaSalle Investment Management Brookfield Multiplex Moreton Bay Arrium Limited BGW Group Aspen Diversified Property Fund IOOF Ginette Muller and Joanne Dunn of FTI Consulting (Australia) Ferrier Hodgson Woolcock Investments Pty Ltd Etleon Pty Ltd
Charter Hall Core Logistics Partnership (CLP) Macada Pty Ltd James Hardie Chauffer Fife Capital Metalsea Pty Ltd Denison Diversified Property Fund KCL Group Undisclosed or Unknown Yatala Industrial Pty Ltd Allmet Engineering East Coast Woodshavings Pty Ltd
Lettieri Group AAD Recycling Services Undisclosed or Unknown Quatius Logistics Virtus Property Group SRS Group Salta Properties Undisclosed or Unknown Undisclosed or Unknown Undisclosed or Unknown U.N.I. Properties Pty Ltd
Queensland 16-18 1439 60-80 441 180 10 77 Former Boral Quarry 45 1 270-280 30 675 60 243 17 93 40 73
2013 INDUSTRIAL TRANSACTIONS 30 | Industrial Investment Market Review and Outlook – 2014
Street Number
Street Name
Suburb
Sub-precinct
Month
Sale Price
Share
Vendor
Purchaser
Schneider Road Riverview Place Bancroft Road Bancroft Road Kimberley Street South Pine Road Evans Road Freeman Road Gosport Street Holt Street Creek Street Hi-Tech Court Brandl Street Brandl Street
Eagle Farm Murarrie Pinkenba Pinkenba Oxley Brendale Salisbury Richlands Hemmant Pinkenba Bundamba Eight Mile Plains Eight Mile Plains Eight Mile Plains
Trade Coast Trade Coast Trade Coast Trade Coast Southern Northern Southern Southern Trade Coast Trade Coast Southern Southern Southern Southern
Sep Jun Nov Jul Oct Feb Sep Mar Feb Dec Apr Apr Apr Apr
$8,946,940 $8,850,000 $8,300,000 $7,075,000 $6,800,000 $6,295,000 $6,150,000 $6,000,000 $5,600,000 $5,285,000 $5,131,000 Portfolio Portfolio Portfolio
100 100 100 100 100 100 100 100 100 100 100 100* 100* 100*
Undisclosed or Unknown Undisclosed or Unknown Sherrin Nominees Pty Ltd Sherrin Nominees Pty Ltd Zenbon Pty Ltd Mwid (Brendale) Pty Ltd Undisclosed or Unknown Accumulus Investment Group Leisure Kart City Pty Ltd Wellington Capital Granville Tobacco Processors Pty Ltd Peet Income Property Fund Peet Income Property Fund Peet Income Property Fund
Undisclosed or Unknown DJR Super Pty Ltd Pipeclay Lawson Ltd Undisclosed or Unknown AEL Holdings Australia Pty Ltd Van Riet Property Developments No 3 Pty Ltd Undisclosed or Unknown Freeman Partners Pty Ltd Industrial Installation and Maintenance Lukshad Pty Ltd Independent Timber Importers Benlee Property Trust No. 6 Benlee Property Trust No. 6 Benlee Property Trust No. 6
2
Bannister Road
Canning Vale
South
Oct
$70,500,000
100
Commonwealth Bank Officers Superannuation Corporation
Charter Hall Core Plus Industrial Fund (CPIF)
218
Bannister Road
Canning Vale
South
Feb
$63,500,000
50
Australian Unity
Charter Hall Core Plus Industrial Fund (CPIF)
Howson Way Orrong Rd Clarence Beach Road Spearwood Avenue Berkshire Road Beard Street Murphy Street Allen Road Casino Street Miguel Road Great Eastern Highway Victoria Road Koojan Avenue Carrington Street Hazelhurst Street Great Northern Highway Wellard Street Welshpool Road Whipple Street Ward Road Berkshire Road Dewar Road Welshpool Road Hazelhurst Street Briggs Street Attwell Street Excellence Drive Hopetoun Place
Bibra Lake Welshpool Henderson Bibra Lake Forrestfield Naval Base O'Connor Forrestdale Welshpool Bibra Lake South Guildford Malaga South Guildford O'Connor Kewdale Bullsbrook Bibra Lake Welshpool Balcatta East Rockingham Forrestfield Bullsbrook Welshpool Kewdale Welshpool Landsdale Wangara Welshpool
South East South South East South South South East South East North East South East North South East North South East North East East East North North East
Sep Feb Oct Nov Apr May Apr Jun Nov Feb Nov Feb Nov Jul Aug Mar May Jan Mar Oct Apr Mar Feb Aug May Feb Sep Nov
$22,588,588 $22,300,000 $21,000,000 $12,600,000 $11,462,260 $10,300,000 $9,560,000 $9,358,740 $8,900,000 $8,800,000 $8,600,000 $8,000,000 $7,810,000 $7,450,000 $7,400,000 $7,046,594 $6,875,000 $6,675,000 $6,550,000 $6,450,000 $5,912,134 $5,764,528 $5,500,000 $5,250,000 $5,250,000 $5,060,000 $5,050,000 Portfolio
100 100 100 100 100 100 100 100 100* 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100*
Tubemakers Erinview Holdings Pty Ltd Austal Limited Arrium Limited KJ & MV Sims Shinagawa Refractories Australasia Pty Ltd Dulux Holdings Pty Ltd (an AkzoNobel brand) Pakwest Pty Ltd Linfox Property Group FCL Numbers 1, 2 and 3 Pty Ltd PMP Print Pty Ltd Dejo Nominees Pty Ltd Pietrino Colli Emeco International Pty Ltd Synmar Pty Ltd Undisclosed or Unknown E & K Siviour Undisclosed or Unknown Lifelong Investments Whipple Street Properties Pty Ltd Undisclosed or Unknown HR & SM Nepia C & G Johnson Dorothea Alice Hackett Undisclosed or Unknown Michael Brocx & Brett Andrew Mounsey WKM Holdings Pty Ltd Undisclosed or Unknown Linfox Property Group FCL Numbers 1, 2 and 3 Pty Ltd
Charter Hall Direct Industrial Fund No. 2 (DIF2) Warrington Management AME Offshore Solutions Undisclosed or Unknown Carrooda Pty Ltd & Sansom Nominees Pty Ltd Tutt Bryant Group Ltd O'Connor WA Hitachi Construction Machinery Undisclosed or Unknown Undisclosed or Unknown Acure Funds Management V10 Property Pty Ltd Pellegrini Family Undisclosed or Unknown Undisclosed or Unknown Kain & Shelton Corporation Limited Undisclosed or Unknown John Hughes State City Investments Pty Ltd Undisclosed or Unknown Terra Spei Pty Ltd Kain & Shelton Corporation Limited Gilpin Park Pty Ltd Undisclosed or Unknown Undisclosed or Unknown Sita Australia Pty Ltd Jim Kidd Sports Undisclosed or Unknown
Caribou Drive Main North Road Grand Trunkway Deeds Road Webb Street Cross Keys Road Tappa Road
Direk Gepps Cross Gillman North Plympton Port Adelaide Cavan Edinburgh
Outer North North West North West Inner West/East North West North West Outer North
8 3 12 8 6 11 11
$32,750,000 $21,350,000 $16,200,000 $12,720,000 $9,425,000 $7,100,000 $6,500,000
100 100 100 100 100 100 100
D & R DeRuvo and Sons Bianco Steel Supplies Cromwell Property Group Metcash Arrium Limited Centuria Property Fund Commercial and General
Cromwell Property Trust 12 Aretzis Group Charter Hall Core Plus Industrial Fund (CPIF) Ascot Capital Quintessential Equity Private investor Private investor
Lot 18 16-18 87 113 33 133 172 341 2 231 62 7 69 36
Western Australia
1 382-410 Lots 18 and 30 305 261-273 Lot 35 2 105-107 19-21 51 64 431 4 146 16 2403 45 170 and 180 1 Lot 2 257-259 19 185 12 33-35 15 55 6&8
South Australia Lot 500 600 Lot 102 65-85 13 519 25-31
*Office and Warehouse Area
Authors
Nick Crothers Director Strategic Research Research and Consulting - Australia +61 2 9220 8525 Nick Crothers is a Director in the Strategic Research team at JLL. He has over 13 years’ experience in property industry research. Nick is responsible for the production of thought leadership papers, the industrial research agenda and strategic advice to clients of JLL. Nick holds a BA in Property Economics.
Michael Fenton Managing Director - New South Wales Head of Industrial - Australia +61 2 9220 8000
Michael has more than 22 years’ experience in the property industry. In this time he has completed some of the largest industrial transactions in Australia. In 2013 Michael won the DEXUS Agency Transaction of the year. Michael Fenton is responsible for business strategy and operations across Australia.
Industrial Investment Market Review and Outlook – 2014 | 31
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www.jll.com.au COPYRIGHT © JONES LANG LASALLE 2014 All rights reserved. No part of this publication may be published without prior written permission from Jones Lang LaSalle. The information in this publication should be regarded solely as a general guide. Whilst care has been taken in its preparation no representation is made or responsibility accepted for the accuracy of the whole or any part. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions regarding numerous variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome, and we draw your attention to this factor.
