Greystar makes logistics break out as local operation bulks up

Greystar Real Estate Partners has projects in Zillmere Rd, Zillmere

US property giant Greystar Real Estate Partners has dramatically entered the local industrial market with a series of purchases that will give it a foothold of more than $500m of projects in a sign the sector’s boom will keep running.

Greystar, which is best known locally for its build to rental housing operations, has snapped up strategic sites in major eastern seaboard capitals, with purchases in Sydney, Melbourne and Brisbane.

The group’s acquisitions give it more than $500m worth of new projects at a time when rental growth is surging as key industrial corridors in big cities have all but no vacancy.

Greystar is familiar with the dynamics of industrial markets and is already active in the United States, with the local play to capitalise on the still rising last mile delivery sector.

By entering the Australian market the funds manager is signalling that it intends to become a serious player alongside foreign entrants like Asian logistics giant ESR and a host of Singaporean trusts also invested locally.

The US manager is also effectively diversifying its local operation from its rising build to rent holdings into the more mature industrial arena.

Known globally for being a market leader in residential build to rent, Greystar has expanded its real estate business to target the last mile and infill logistics sector as a highly strategic long-term investment opportunity.

“Our growing portfolio of logistics acquisitions across Australia’s major cities represents our targeted entry into the Australian industrial sector,“ Greystar managing director, Australia, Chris Key, said. “Greystar has a proven track record of executing a similar strategy in the US – which has resulted in the current $2.1bn strong portfolio of industrial and logistics properties.”

“We maintain a high conviction view that there is significant opportunity for Greystar to grow our platform in the last mile and infill logistics sector and this series of investments here in Australia is an exciting milestone for our business. We look forward to further progressing our pipeline of projects in the space,” he added.

Greystar’s industrial platform began in 2020 in the United States and the industrial division now spans 25 development offices with more than $2.1bn in projects underway, comprising 1 million square metres of development and acquisition opportunities.

Over the past 15 months, Greystar has made five acquisitions across major Australian cities – with the end value of the projects based on redevelopment and expansion expected to top $500m.

In late September, Greystar completed the acquisition of its largest project with the settlement of a 5.1ha brownfield site in South Granville in Sydney’s Central West, and at the same time, exchanged contracts for a 2.1ha brownfield site in Melbourne’s West Footscray.

The South Granville site, located at 26 Ferndell St, is surrounded by major infrastructure as it is near the M4 & M5 motorways, has good links to Sydney Airport and Seaport. It was acquired for about $95m from entities associated with the McMillan family, according to title records.

Greystar plans to redevelop the Ferndell St property into a modern logistics facility suited to meet the needs of modern users.

In West Footscray, Greystar agreed to purchase a site at 36-38 Roberts St, and the property is due to settle in December, from the private Cadence. It has an existing 7,000sq m warehouse plus surplus land to cater for a further 7,600sq m of warehousing.

Greystar has already made three more acquisitions in Brisbane’s industrial property market, with projects at 483–485 Zillmere Rd, Zillmere; 971 Fairfield Rd, Yeerongpilly; and 175 Dutton Rd, Pinkenba.

All three sites are located near key Brisbane infrastructure and have approved plans for redevelopment.

And it is forging ahead in build to rent.

Greystar this month kicked off building on its $500m South Melbourne development in Gladstone St. Working with construction firm Icon, the project is set to be one of Australia’s largest purpose-built facilities with 700 new residential units.

The project is benefiting from the Andrews government’s build to rent land tax reform, which aims to make housing more affordable by increasing the supply of rental properties in inner and middle-ring suburbs of Melbourne.

Greystar last year unveiled its flagship Australian investment vehicle – the Greystar Australia Multifamily Venture I – with total capital commitments of $1.3bn. It is backed by Canada‘s Ivanhoé Cambridge and a major European institutional investor alongside founding investor APG Asset Management.

Greystar is already underway on a project in the inner Melbourne market of South Yarra and is aiming to be a leader in institutionalising rental housing supply.

Fellow North American groups including private equity firm Blackstone and diversified player Oxford Properties Group are also active in build to rent locally and Greystar’s push into industrial will give it an extra element as it seeks to expand.