SYDNEY'S INDUSTRIAL POWERHOUSE SHIFTING SOUTH WEST
Written on the 8 September 2015
THE south west is emerging as Sydney's industrial powerhouse, eclipsing the traditionally saturated outer west as the region undergoes transformation amid major infrastructure projects in the area.
A new CBRE Viewpoint highlights the changing landscape of Sydney's industrial market, with the south west emerging as the new growth centre, with 850,000sqm of stock earmarked for development between 2017 and 2027.
CBRE senior research analyst Alexander Tan says shrinking stock levels in south Sydney and the central west markets is making the south west an increasingly attractive alternative for industrial operators.
"The gentrification of industrial estates such as south Sydney and the central west is an inevitable evolution for major cities, and one in which Sydney is currently experiencing," Tan says.
"Improvements of transportation networks such as WestConnex, combined with major developments including the Moorebank Intermodal Terminal, have put the south west in the spotlight."
According to CBRE Research, about 210,000sqm of industrial stock in south Sydney could be converted over the next five years.
"Taking in account the limited supply pipeline for warehouse stock in south Sydney over the next five years vacancy is expected to tighten further," Tan says.
"These withdrawals, followed by the diversification of commercial uses for industrial land, are reflective of a diminishing industrial presence in south Sydney.
"As industrial vacancy gets tighter in south Sydney, the central west and south west precincts emerge as clear alternatives, in terms of proximity."
Tan says additional stock shortages due to residential conversion activity in the central west would see the south west rise as the city's next big industrial hub.
"The south west is positioned to benefit from this migration wave, absorbing tenants relocating from south Sydney and the central west, while also remaining attractive in its own right."
CBRE NSW industrial director Michael O'Neill says the south west's easy accessibility combined with major developments earmarked for the area will see it become Sydney's industrial centre of the future.
"Developers like Stockland are poised to take advantage of growth within the region with DA approved plans for a 28,800sqm facility at Stage 1, 35 Stennett Road, Ingleburn, which can be delivered within seven months," O'Neill says.
"As the traditional industrial precincts circling the CBD continue to be absorbed by Sydney's booming residential market, the south west will evolve into one of the city's largest industrial markets."
O'Neill says projects such as the WestConnex and Moorebank Intermodal Terminal will be a game changer for the market, significantly improving accessibility to the south west in the same way the M4 and M7 improved access to the outer west.
"WestConnex will reduce travel time by 25 minutes, which is likely to alleviate the need for tenants to be located close to Sydney Airport, Port Botany and the Sydney CBD encouraging more tenant moves to the south west as a result."
CBRE's Thomas Mosca says Moorebank and the surrounding Liverpool areas are set to ride the wave of Sydney's property boom, with the city centre earmarked for major development.
"Over the next five years, the face of Liverpool will change significantly, with Liverpool City Council proposing to rezone the CBD commercial core to create a mixed-use city centre as the area's residential population grows," Mosca says.
"Liverpool City Council has begun investigations to rezone the existing Moorebank industrial area to higher density residential, which will underpin the area's transformation into an integrated, mixed-use river city."
Mosca says as industrial operators look to acquire a presence at the new Moorebank Intermodal Terminal, the area's traditional industrial hubs are being eyed up for residential conversion.
Goodman's riverfront industrial holdings are among the sites tipped for residential development.
"The area is on the radar of speculative developers looking to secure large holdings in the area, on the basis of future rezoning," says Mosca.