ESR Australia has bought one of the few remaining large-scale industrial sites in South Sydney from Allnex for $143 million, with plans to invest a further $300 million to develop a multi-storey logistics facility. 

ESR acquired the 48,000 sqm site at 49 Stephen Road in Banksmeadow, which is currently home to industrial coating resins global leader, Allnex.  

The site was purchased on behalf of ESR Australia Development Partnership (EADP) ll, which will re-develop the asset into a core logistics estate with 58,000 sqm of gross floor area. 

The property has planning controls with no floor space ratio (FSR) or height limits, providing a significant opportunity to develop multi-level warehousing on the site. 

49 Stephen Road in Banksmeadow

Under the terms of the acquisition, Allnex has entered a five-year leaseback which will provide sufficient time for them to ensure alternative sourcing routes are established in close alignment with its customers and ESR time to obtain all necessary planning approvals. 

The acquisition takes the ESR development pipeline in Australia to A$7.9 billion at a time when demand for logistics property has never been higher. 

“ESR Australia is pleased to secure an infill site of this scale in the highly sought after Botany Bay Precinct,” ESR Australia CEO Phil Pearce said. 

“The strong demand for space within the precinct and site’s planning overlay will enable us to explore multi-level warehousing on the site.” 

Allnex VP of Commercial Southeast Asia, Australia, and New Zealand, Zel Medak, expressed that the decision to sell the Botany Bay property followed a strategic review of its regional operations. 

“Allnex recognises the shifts within the Australian surface coatings market, both geographically and technologically, and is proactively taking measures to ensure the continuity of our operations,” Medak said.   

“We are pleased to reach an agreement with ESR to ensure minimal disruption and to continue to provide our customers with high-quality and innovative products.” 

South Sydney is one of Sydney’s best-located precincts, with proximity to Port Botany, Sydney Kingsford Smith Airport, and major arterial road networks.  

Sydney has an extremely low vacancy rate sitting at 0.2%, while prime rental rates have grown 37.2% over the last 12 months and are forecasted to rise another 15% during 2023. 

ESR is APAC’s largest real asset manager powered by the New Economy and the third largest listed real estate investment manager globally. It has US$156 billion in total assets under management.