Goodman upgrades growth forecast amid industrial property boom

The off-market deal was done by Colliers agents James Stott and Charlie Woodley, who declined to comment on the buyer.

Arrow Capital Partners paid $13.68 million for the 30,000 sq m property just two years ago, with plans to develop a new business park. There are three warehouses on the 29,700 sq m site, which cover about 13,700 sq m.

Also in Dandenong South, Charter Hall recently sold 1-11 Remington Drive for $22.3 million, a sum that the listed institution told investors was done at a 22 per cent premium to book value.

The 9484 sq m building is on a 16,616 sq m parcel of land and was also sold to an owner-occupier, the Design Group, a sheet metal company.

Stott said the south-east market stands out from other industrial markets due to the lack of future supply.

“The low vacancy is creating systemic issues for a large section of the market, and when these rare opportunities come to market we often see fierce competition from owner-occupiers, private investors and developers who can all employ different exit strategies,” he said.

Cadence Property Group and GPT recently completed a joint venture project, the $150 million, 60,686 sq m Keylink Estate, which sits across four individual tenancies, in the industrial location of Keysborough.

Colliers worked with the developers to lease spaces before completion to a mix of multinational and corporate occupiers, including Early Settler, Hartman Group, AFS Logistics and Mohawk Industries-subsidiary Premium Floors.

Global industrial property giant Goodman agreed that with tight supply and high demand, competition was strong for well-located assets.

In the company’s March quarter update, co-founder and chief executive Greg Goodman said the group had set its sights on the 2024 year after reporting strong demand for its warehouses.

The ASX-listed global group has a market value of $37.21 billion and has issued a new upgrade to its full-year earnings guidance from 13.5 to 15 per cent growth. It owns and manages high-tech industrial storage centres across the globe and is one of the largest landlords for e-commerce giant Amazon.

Goodman has focused on developing vertical warehouses in areas where land is tight, such as Hong Kong, Japan and South Sydney. Its primary areas are in gateway cities.

This positive outlook was boosted by its development pipeline, now worth $13 billion, and assets under management of $80.7 billion.

Goodman said the scarcity of space in the group’s locations, and customer need for more productive and sustainable solutions, was “supporting underlying property fundamentals”.

“These are driving development demand and rental growth,” he said. “Despite the global macroeconomic volatility, we have almost zero vacancy and continue to execute on our development strategy, with annual production rate for the 2023 financial year averaging around $7 billion.”

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JP Morgan analyst Richard Jones said, in a note to clients, that Goodman has a strong development workbook, providing very high margins given the large spread between its average 6.4 per cent development yield on cost and average global capitalisation rate of 4.2 per cent.

“The assets under management growth has been strong at 18 per cent, underpinned by development completions,” Jones said.

“Goodman also has a strong balance sheet to take advantage of opportunities should they arise but trades around our valuation.”

Overall, Goodman has solid liquidity of $3.2 billion, comprising $1.5 billion of cash and $1.7 billion of undrawn bank lines. The weighted average debt maturity is 5½ years, and with its partnerships’ equity, the cash and available debt commitments total $18.5 billion.

“We have plenty of available resources and a strong development pipeline,” Goodman said.

He said that with continued high demand for industrial property and, in areas such as Sydney, scarcity of land the group was in good stead for a solid year,“and we will now set our sights on 2024”.