14th February 2016.
Sirona Capital has secured a $45 million investment from Goldman Sachs to develop two sites on Perth's northern edge as freight and logistics hubs.
The two sites, with a combined $1 billion cost over the next 20 years, will play a crucial role in alleviating the shortage of large-lot freight facilities in WA, Sirona head of private equity Kelvin Flynn said.
"It's a logical step to move into the north," Mr Flynn told The Australian Financial Review. "We've got a long-term hold-and-deliver philosophy."
Sirona is also overseeing the $220 million Kings Square development in Fremantle.
The investment by the Goldman-owned Austreo Property Ventures into the so-called Northern Gateway project will help fund the development of a150-hectare site at Muchea as a heavy vehicle services hub supporting the resources and agricultural industries in the state's north. It will also fund a separate development on 200ha at Bullsbrook, 32 kilometres north of the Perth CBD. The Bullsbrook site will focus on distribution and logistics facilities for the growing population – residents of the adjacent City of Swan are expect to near-double to 200,000 from the current 115,000 by 2031.
Both sites, purchased by Sirona as agricultural land and since rezoned to industrial, seek to make the most of planned infrastructure developments, such as the 37km NorthLink WA, a planned – and funded – highway project that will become the main freight route for traffic to the state's north and take large trucks off the existing Great Northern Highway in the tourist-heavy Swan Valley.
Construction of the $1.12 billion road project is scheduled to commence this year and finish in 2019. Bullsbrook also has an existing rail line, which requires an upgrade, to the main freight line connecting Perth to central and eastern Australia.
The Muchea site, adjacent to a proposed road train assembly area, is likely to be developed first.
The development of an alternative on the city's northern edge would give logistics operators a cheaper alternative to the established facilities in the east. Warehousing rents in Bullsbrook were between $70 and $85 a square metre, while they were between $90 and $110 in main areas such as Kewdale and Welshpool. Hard stand lay-down rates were also a lower $7 to $15 a square metre compared with $18 to $25, said James Condon, Savills' director of industrial and business services.
The biggest challenge in the Bullsbrook area, however, was the speed with which any new facilities would be absorbed, Mr Condon said.
"There's so much land available for industrial," he said. "It will take quite some time for that to be taken up by the market."
Nor are the Sirona-owned sites the only options for the development of new freight and logistics facilities. In South Bullsbrook, a total 430ha have been rezoned, potentially creating competition for the developer.
Rivals would struggle to come up with sites as large, Mr Flynn said.
"The main restriction outside of Sirona's industrial land holding is the highly fragmented ownership and current inability to amalgamate land," he said.