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Airport pledge to encourage longer industrial tenancies

By Ryan Ellem on Jun 15 2017


The $6 billion Federal Budget commitment for the long-mooted Badgerys Creek airport is set to spur a wave of long-term leases in Western Sydney’s competitive industrial precincts, according to LJ Hooker Commercial.

This month, LJ Hooker Commercial Silverwater secured a 10 year-lease for industrial asset owner and manager Propertylink for their 9,327sqm warehouse in Newton Road, Wetherill Park, at $105sqm. The lease, to construction materials specialists Sika Australia, is worth almost $1 million annually. LJ Hooker Commercial Silverwater Director Marcel Elias was appointed by Propertylink to secure the tenancy.

Mr Elias said the Budget commitment of the Badgerys Creek airport – anticipated to be operational in 2026 -  would further strengthen competition for industrial facilities with quality distribution amenities and access to the M4.

Post construction, the airport is expected to generate 60,000 long-term jobs.

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“Being the second Sydney-basin airport, Badgerys Creek will be the city’s major western economic driver,” said Mr Elias. “Areas like Wetherill Park are already in significant demand and the future airport’s role as a nation-leading distribution and logistics hub will extend this interest.”

Mr Elias tipped the major infrastructure project would convince tenants to adopt longer-term outlooks.

“We’ll start to see 10-plus year commitments becoming more popular for assets with scale in established industrial precincts in a 20km radius of the planned airport. Tenants seeking new leases and renewals in the logistics sector will want to have their futures secured when the airport become operational, when there will likely be a pinch-point in supply.

“Propertylink made the long-term vision to refurb its office and showroom facilities and with the major infrastructure additions to Western Sydney, they’ve now secured a quality tenants for the next decade.”
Propertylink recently refurbished the Newton Road office and showroom, which represents 1,955sqm of the 9,357qsm site. The warehouse component represents 7,402sqm on site.

The facility is accessed via two on-grade roller shutter doors and four loading docks. The facility is in proximity to Reconciliation Drive and The Horsley Drive - main access points to the M4.

In terms of sales, Mr Elias said many landlords with a foothold in the surrounding areas were extremely well-placed to capitalise on the future airport and many would also look to divest and capitalise ahead of the airport’s arrival.

He said demand in the Western Sydney industrial corridors had ramped up exponentially in the last 18 months.
“The Central Western and Outer Western industrial precincts have been in significant demand; most of the speculative builds over 2016 in these areas had tenants signed before lock-up,” he said.