Hong Kong toolmaker powers into $130m Melbourne Airport shed
An artist’s impression of the Techtronic Industries warehouse at Melbourne Airport.

Hong Kong toolmaker powers into $130m Melbourne Airport shed

Melbourne Airport has secured one of the biggest industrial leasing pre-commitments of the year after signing up Hong Kong-listed power tools giant Techtronic Industries to a 74,200-square-metre distribution centre at its business park.

The $130 million automated facility will be the largest warehouse built to date at the 410-hectare logistics estate, which is the biggest in the southern hemisphere. Existing tenants at Melbourne Airport Business Park include Toll, TNT, Porsche, World Couriers and Nippon Express.

The Melbourne Airport warehouse is the second major facility Techtronic has committed to in Australia in the past 18 months after it signed up to lease a similar sized distribution centre at The Yards industrial estate in western Sydney on a 10-year term in April last year.

Techtronic’s expansion into two giant state-of-the-art distribution centres highlights the investment being made by major retailers around the world in their supply chains, amid growth in e-commerce and increasing consumer demands for same-day delivery.

Australia has become a major growth market for the Hong Kong company, which manufactures and distributes chainsaws, lawnmowers and other power tools across brands such as Milwaukee, AEG and Ryobi.

According to its interim results, sales in Australia and Asia rose 23 per cent over the first six months of this year. Across all regions, sales grew by 10 per cent to $US7 billion ($10 billion).

Melbourne Airport is owned by Australia Pacific Airports, a private company made up of institutional investors including the Future Fund, IFM Investors and AMP.

Stronger partnerships

“When built, the [Techtronic facility] will be the largest shed across our business park,” said Andrew Gardiner, Melbourne Airport’s chief of commercial property and retail.

“Our location will bring a lot of value to Techtronic’s distribution business, enabling easy access to their various markets.”

Techtronic partnered with industrial property and supply chain specialist TMX to design, procure and deliver the purpose-built facility. TMX will project manage delivery of the development, which is due to be completed by the third quarter of 2024.

“The nature of Techtronic’s business is that it requires an efficient, large-scale distribution network to deliver within the fast time frames expected by its Australian customer base,” said Angus Perry, development manager at TMX.

“The Australian property market is incredibly tight, and we’re delighted that we could help Techtronic secure a site of such scale in a premium location for their operations.”

Although the terms of the leasing deal were not disclosed, industrial rents average about $90 a square metre in Melbourne’s north according to a report by commercial agents Cushman & Wakefield.

This would value the Techtronic deal at more than $6.6 million a year, excluding incentives of about 20 per cent to 25 per cent.

Airport business parks are especially attractive to both tenants and investors given the proximity to major transport and infrastructure facilities.

Last month, Melbourne developer Livv partnered with fund manager and non-bank lender Payton Capital on the $93 million acquisition of a 141 hectare greenfield site next door to Avalon Airport in greater Geelong.

Livv plans to turn the site into a $1 billion mixed-use commercial, logistics and employment precinct once it is rezoned over the next couple of years.

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