ESR bets on Sydney logistics boom as backers exit in $300m-plus play

ESR is keeping the Huntingwood development site in Sydney under its wing.

Asian warehouse giant ESR is showing its faith in Sydney’s industrial market and will keep a huge development site in Huntingwood under its wing in a transaction worth more than $300m.

The huge site in Sydney’s western suburbs had gone to market with approvals in place for a major logistics development, and the manager’s desire to secure it shows that demand for Sydney industrial land is holding up.

Developers are keen on industrial land despite demand for space cooling in some parts of Sydney. ESR going into due diligence shows that big players are trying to lock down key sites, particularly those with planning ­already in place.

The strong appetite for industrial land has been on show in deals including Goodman Group acquiring the CSR land adjacent to the Western Sydney Airport in Badgerys Creek for about $575m. The company is also in talks to buy another major parcel near Sydney’s existing international airport in Mascot for about $680m.

The investors that had backed the purchase by a predecessor firm in 2022 wanted to realise their holdings.

Logos bought the site from China’s Lesso in a deal backed by private equity firm KKR and UAE sovereign wealth fund Mubadala Investment Company. Logos was later acquired by ESR as part of a wider corporate transaction.

The original consortium paid about $236m for the 26.42ha greenfield site, and plans have since advanced for a prime-grade logistics estate.

Colliers agents Gavin Bishop and Sean Thomson and Cushman & Wakefield agents Tony Iuliano and David Hall are handling the deal.

However, they and the parties declined to comment.

The deal has been lucrative for capital backers as industrial land values have risen in select infill ­locations even as some outer suburban areas have come under pressure.

The Huntingwood site was billed as one of Australia’s premier approved development opportunities, as it sits in one of Sydney’s key gateway industrial corridors. 

ESR won approval to build and operate a 24/7 warehouse and distribution centre consisting of five warehouse buildings, including a multi-level building.

The development has a capital investment value of $446m and is expected to generate more than 900 operational jobs once completed. ESR has billed the development as supporting the demand for freight and logistics development in western Sydney.

It will transform the property into a masterplanned logistics ­estate incorporating more than 18ha of net developable area and 140,881sq m of floor area.

The site is busy with an early works package being carried out by civil contractor AWJ.

The Huntingwood estate is set to capitalise on scarce industrial land supply and strong tenant ­migration trends into the area. The sub-market is one of Sydney’s most established industrial and logistics precincts, and it also is part of the highly sought after western Sydney data centre ­cluster.

The site has more than 1km of frontage to the M4 Motorway and Great Western Highway, with approved access via a signalised intersection on the Great Western Highway and Flushcombe Road.