A Sydney based syndicate has purchased a tenanted modern office/warehouse for $9,600,000 at 9-13 Viola Place, Brisbane Airport.
Brokered by Shaw Harrison, Director, Industrial & Logistics at Savills Australia, the Trade Coast leasehold asset comprises 8,266sq m of net lettable area (NLA) over a 20,130sq m site and was taken to the market last year with strong interest received by multiple parties through an expressions of interest campaign.
Mr Harrison said, “Initially, when we took the property to market, we had some remaining office vacancy and throughout the negotiations, we concluded a 1,047sq m lease. The asset, now being offered fully occupied, had the WALE reset from 2.38 years to 3.84 years and is occupied by high caliber tenants DHL Global Forwarding, Hitachi Rail STS & Bradken Resources.”
The property is sold as Leasehold with a secure long ground lease in place until 2047. The superior business park in a core location, adjacent to the Brisbane Airport makes this an extremely attractive location for freight, logistics and civil infrastructure.
The total net income of $913,445 offers the purchasers a very attractive return of 9.52%, which is high yielding simply because of the leasehold nature. This represents an outstanding opportunity for the purchaser to offer an excellent return to their investors on an A Grade asset. If an asset equivalent to this was sold in neighbouring Eagle Farm as a freehold property with the caliber of these tenants, we might have expected 250-300 basis points tighter.
“We have seen an enormous return of capital seeking industrial assets again, particularly as the sector has weathered the market significantly better than some other asset classes. Throughout the campaign, we had enormous interest with the opportunity, but many buyers just didn’t understand the leasehold nature and weren’t confident of the future valuation of the asset. When you can pick up an asset of this calibre with a cap rate spread that wide by comparison to freehold, the risk is minimised pretty quickly.
“Since COVID-19, many large wholesalers were caught off guard by holes in their supply chain logistics. It obviously wasn’t just toilet paper that everyone went mad over. Increases with volumes in electronics, food, medical, clothing, online shopping, manufacturing, transport and last mile logistics have all witnessed growth during the pandemic. The industrial sector has been incredibly resilient throughout all of the dramas going on, as industrial businesses kept trading and most businesses didn’t have any shutdowns.
“We have even seen local manufacturing starting to be of favour again, with the international supply from foreign manufacturers struggling to maintain continued supply,” said Mr Harrison.