LBP Developments has sold a prime industrial development site in Southwest Sydney to a private developer for $16.3 million, equating to $1,555 per sqm of land.
The 10,416 sqm site at 21 Marigold Street in Revesby offered a low building coverage of just 38% and a prominent 75m frontage to Marigold Street.
It is currently occupied by Mirotone, with the lease expiring in April 2022.
The transaction represents a current passing yield of 2.45 per cent, however the current rent was of less concern since the site was purchased for development purposes.
The on-market expression of interest campaign was competitive with 11 round one bids, reflecting the demand for industrial land and the upward pressure on prices.
Trent Gallagher and Angus Urquhart of Colliers represented the seller.
“The deal resets land values within the region and shows multi-level warehousing in the south west is on the horizon,” Gallagher said.
“This was a fantastic opportunity to secure one of the last remaining scalable industrial development sites within Revesby where land supply is greatly diminishing, providing strong prospects for capital and rental growth.”
Urquhart said the land rate achieved surpassed all expectations in the inner south west market and reflected how difficult it was to find prime industrial sites in the wider Sydney region.
Colliers said the record-breaking $802 million sale of a 13.8-hectare Mascot site was expected to be the catalyst for a price boom in surrounding regions.
There has been increased demand for multi-level warehousing and logistic facilities on the back of the shift to online shopping experienced throughout the pandemic.
In the 12 months to September 2021, the land values from 1 to 5 hectares in South West Sydney have risen 24.1%, according to Director of Industrial Research for Colliers Luke Crawford.
This was the highest annual growth rate since March 2019 and well above the 10-year average growth rate of 13.7% per annum.
Colliers’ research also showed that the catalysts behind the recent growth in land values has been the diminishing availability of industrial zoned land and significant levels of yield compression.
Last week, Dexus Industria REIT exchanged contracts to buy a warehouse in the Brisbane suburb of Narangba for $44.5 million.
In November, Centuria Industrial REIT acquired a portfolio of four industrial properties across Sydney, Melbourne and Brisbane for $129.4 million.
In September, a development site in the Western Sydney Aerotropolis sold for $30 million-plus following strong buyer interest.