Australian property investor, Centennial has acquired a ‘mid-space’ logistics facility in Victoria’s Dandenong South for $19.8 million from floral supplier tycoon, Apack, as investors seek out sale and leaseback opportunities in Melbourne. 

The 20-50 Waterview Close property offered 9,304 sqm of gross floor area on a 17,480 sqm site in Dandenong South, about 31 kilometres south-east of Melbourne’s central business district.  

The deal was negotiated off-market because Apack still occupied the property and Centennial signed a three-year leaseback agreement at settlement. 

“We recognised the significant functionality and positioning this asset provides, and this transaction allows us to continue executing our strategy of acquiring modern and highly functional mid-space assets with flexible improvements in urban land constrained locations, that provide opportunity to enhance investor returns,” Centennial’s Executive Director and CEO – Industrial & Logistics, Paul Ford said.  

Scott Braithwaite of Knight Frank, who handled negotiations for the deal, said sale and leasebacks presented an opportunity to change commercial terms and lease particulars between vendors and purchasers, providing a large level of liquidity and a win/win outcome for both parties.  

The deal comes after the company acquired a large logistics facility worth $35 million west of Sydney.  

The purchases add to Centennial Industrial & Logistics’ $1 billion investment portfolio of 63 facilities in Victoria, New South Wales, South Australia and Queensland. 

In Melbourne, industrial land values continued to grow, as leasing demand reached unprecedented levels.  

Katy Dean, Head of Industrial Research for Knight Frank Australia, said demand for the industrial sector was expanding at a rapid rate. 

According to new Knight Frank research, there was a continuation of rental growth rates of about 2% during Q4 2021 in most markets and a rise of between 3.8%-6.2% on average over the year.