Charlie Buxton’s Cadence buys in Port Melbourne as Dexus fund exits

The industrial powerhouse has claimed one of Port Melbourne's last remaining business parks, adding to its $170m spending spree across two states.

Cadence Property Group chief executive Charlie Buxton is bullish about industrial property.

The private Cadence Property Group has expanded its flagship industrial trust with the purchase of the Aquatica Business Park in Port Melbourne, capitalising on tightening supply and rising rents in the fringe industrial precinct.

The Cadence Industrial Investment Partnership picked up the site from the unlisted Dexus Wholesale Property Fund for an undisclosed sum, which industry players put at about $40m.

Cushman & Wakefield’s Chris Jones, Tony Iuliano, Adrian Rowse and Charlie Holmes brokered the deal. The agency said that the process reinforced Port Melbourne’s status as a high-performing infill industrial hub among investors, evidenced by strong forecast rental growth and a severely diminished industrial land supply.

Sitting on a 1.7ha site at the ­intersection of Lorimer Street and Todd Road, Aquatica Business Park comprises nine office and warehouse units with a total gross lettable area of 10,222sq m. The ­estate sports dual street frontages, all-weather awnings and parking for 172 vehicles.

The acquisition is the fifth asset purchased by CIIP, and shows the firm’s belief in Melbourne’s inner-city industrial markets, where tailwinds ranging from land scarcity to infrastructure investment and rezoning constraints are backing values.

Cadence Property Group chief executive Charlie Buxton said the buys show CIIP’s core-plus strategy, which balanced secure income, strong reversion potential and long-term capital growth.

“Acquiring a city-fringe asset at an attractive basis below replacement cost and underpinned by land value presents a rare opportunity to generate outperformance in a highly constrained market,” Mr Buxton said. “Port Melbourne is tightly held by institutional groups, and with Industrial 1 zoned land becoming increasingly scarce north of the West Gate Freeway, we anticipate enduring demand from tenants and investors alike.”

Aquatica Business Park is 89 per cent leased to national and international tenants, including AkzoNobel, TK Elevator Australia and Medacta. The asset offers ­immediate income with potential for strong income reversion given in-place rents are approximately 20 per cent below market.

Cadence head of investment management Tony Mount said the estate’s staggered leasing profile meant there were opportunities to boost rents over time. “The current leasing environment in Port Melbourne remains robust, particularly for sub-5000sq m tenancies, where demand continues to outstrip supply,” he said.

The park is in the Fishermans Bend National Employment and Innovation Cluster, a Victorian government-designated priority precinct for industrial and technology-based employment.

Cadence, with the backing of the heavyweight VFMC, last month bought the four-strong portfolio from the listed Stockland for $170.5m. That deal covers assets in Melbourne and Sydney and expanded its national footprint. Those assets were in Altona North and Truganina in Melbourne and at Erskine Park in Sydney.