Hewlett Packard signs lease in strong industrial market

In one of the latest deals, Frasers Property has inked a deal at its Rhodes Corporate Park in Sydney, with a five-year lease with Hewlett Packard PPS Australia Pty Ltd (HP).

HP has entered into a direct lease with Frasers Property for 2777 square metres at Level 5 in Building F. The lease starts in June 2020 on a net rental of $450 square metres and annual increases of four per cent.

Chamoun Malki, general manager – investments for Frasers Property Industrial said on average, gross rentals at Rhodes Corporate Park are about one third or less when compared to typical CBD gross rents.

Colliers International’s Gavin Bishop, national director, industrial, said in Sydney last year, industrial rents grew 6.5 per cent on average; capital values for prime grade assets increased 17.6 per cent to $3350 per sq m and secondary grade building values grew by 16.9 per cent to $2525 per sq m.

“With many institutional and private investors choosing to retain their assets due to the tightly held Sydney market, about 62 per cent of the assets to trade in 2019 have been by corporate vendors,” Mr Bishop said.

“This is a trend we expect to continue as these corporate vendors sell their assets on sale and leaseback transactions, divest their non-core assets and recycle this capital back within their businesses.”

LJ Hooker Commercial’s latest Industrial Market Monitor, said the tightening will drive average yields to 4.9 per cent across Sydney’s four main industrial precincts over the next 12-18 months. The forecast would take total yield compression to 160 basis points below pre-GFC levels.

LJ Hooker Commercial managing director Mathew Tiller, said, while supplies can sustain the sector for another decade, the availability of ready-to-build land has created bottlenecks.

“Enabling infrastructure is still five years away in some pockets surrounding the second Sydney Airport at Badgerys Creek, operational in 2026,” Mr Tiller said.