Logistics assets and office towers in demand

Signs of a two-track commercial property market are emerging with deals being struck for logistics assets and prime office towers.

Logistics is running hottest and in the latest deal, industry stalwart Charter Hall has again dived into the sector.

Signs of a two-track commercial property market are emerging with deals being struck for logistics assets and prime office towers in plays showing these areas are on track in the wake of the coronavirus crisis.

Top investors are willing to punt that these properties are relatively protected from the worst of the fallout from the virus, even if office owners must adjust to more tenants having staff working at home.

While large-scale office deals fell over in every major city as the economy was locked down, prices have adjusted and some transactions have been quietly rekindled.

But logistics is running hottest and in the latest deal, industry stalwart Charter Hall has again dived into the sector.

The acquisitive company is continuing its post-crisis surge and has picked up a $115m logistics property in western Sydney, adding to its $40bn funds empire.

The unlisted Charter Hall Prime Industrial Fund and Charter Hall Direct Industrial Fund No 4 bought the property from the Kador Group in an off-market transaction. The asset in Lockwood Drive, Erskine Park, reflected a 4.75 per cent core capitalisation rate. The facility was originally developed in 2008 for the tenant, Winc, as its national distribution centre, and it entered into a new 12-year lease.

“The acquisition of Winc’s ­Erskine Park facility is consistent with the group’s strategy to ­acquire core logistics properties leased to good-quality tenants on long-term leases situated in key industrial precincts with access to major infrastructure and transport networks,” Charter Hall industrial and logistics chief executive Richard Stacker said.

The deal was brokered by Michael Fenton of Savills and adds to Charter Hall’s $10bn industrial and logistics portfolio. He said the sale reflected the continued strength in the sector relative to other asset classes.

Dealmaking is also getting under way for office buildings, with Singaporean sovereign wealth fund GIC in talks to buy a Melbourne CBD tower from LaSalle Investment Management for about $350m.

LaSalle had paid an AMP Capital-run fund $231m for the 30-level office building at 222 Exhibition Street in 2015.

The tower, which sits near Lonsdale and Bourke streets in the heart of the city, was built in 1988 and has a wide range of ­tenants.