Macquarie Park data centre dumped in lieu of unit towers

A warehousing giant has dumped plans for a data centre and listed a key Macquarie Park site for $100m, hoping to attract housing developers instead.

ESR is selling a business park in Macquarie Park, Sydney, for more than $100m.

Asian warehousing giant ESR has become the latest group to cash in on the boom in the accommodation sector, putting a business park in Macquarie Park in Sydney on the block for more than $100m.

Rather than join rivals Goodman and Stockland in rezoning sites it is looking to sell 44-50 Waterloo Rd, which it picked up three years ago from an AMP fund for $71m, and which it earmarked for a data centre.

Now it has tapped Colliers to sell the property and hopes to attract developers keen to pursue either build-to-rent or purpose-built student accommodation, as both areas are attracting heavy amounts of capital. ESR said when it bought the site in 2021 that it had the development potential for a 46,000sq m project but it now concentrated on other areas. Notably earlier this year it bought sites at Horsley Park and Erskine Park for about $210m.

A residential developer could capitalise on the site’s position next to the Macquarie Park Train Station, with tenants in the existing buildings on the 1.5ha site to depart once works got underway. The site has a gross rental holding income of about $3.48m per annum while plans are finalised.

The property is in the Macquarie Park Incentive Precinct, which was earmarked by the NSW government to be boosted as a key economic and innovation precinct but residential projects are seen as even more lucrative. ESR had originally planned a staged development that could have seen either office buildings or, as it had pursued, a data centre built.

Colliers agents Guillaume Volz, Trent Gallagher, Adam Woodward and James Mitchell are handling the sale. They said the site was a rare opportunity to acquire 15,198sq m of land within the Macquarie Park residential and commercial precinct.

It has zoning upside permitting build-to-rent development and purpose-built student accommodation and a proposed rezoning of the site would provide a 110m height limit, presenting a rare development in Sydney. Most other build-to-rent projects are in the hotspot of Parramatta or elsewhere in the city’s western suburbs, with some proposed sites also in St Leonards, Chatswood and North Sydney. “The Sydney BTR supply continues to lag other national markets, with the sector having difficulty finding feasible sites en masse, principally due to the high land values and the strong competition from traditional build-to-sell projects,” Mr Volz said. He said it was an opportunity to acquire a site specifically targeted at institutional BTR operators.

An ESR Australia spokeswoman confirmed that the Macquarie Park site was originally purchased with the intention to seed a new vehicle and convert it to a data centre.

“Given the recommended rezoning changes announced by the state government proposing the area to now be designated for high and better use (i.e. residential), we are considering selling the site. The proposed zoning is not our core expertise or focus and will allow it to be developed in alignment with the new zoning to benefit the local community,” she said.

Sydney’s housing market supply problems are widely reported, with a growing population and high rental growth exacerbating this issue. In 2023, NSW produced about six homes per 1000 people, fewer than both Victoria and Queensland.

Macquarie Park has benefited from recent urban renewal with investment in infrastructure, such as the upgrade to the Macquarie Park Metro line.