Industrial Lease

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Australian instant boiling water system manufacturer, Zip Industries, has committed to 1,661sqm at Hallam, signing a lease for part of 59-65 Wedgewood Road.
Savills Australia’s David Kalb and Kosta Filinis, in conjunction with Crabtrees Real Estate, negotiated the five-year deal at $82 per sqm on behalf of a private landlord. 
Zip took over from Polyflor Australia last month.
Kalb said Savills initially sold the property for $3.68 million to an owner-occupier, who had residual space to lease out after moving in.
“The refit encompassed significant office space and a high-quality showroom, which suited the tenant perfectly,” he said.
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Zip's industrialist founder Michael Crouch passed away this month at the age of 84 after a battle with cancer.
Crouch had sold his majority share of Zip.
Raised in Sydney, Crouch aged 28, acquired a small hot-water company in Sydney called Zip Heaters which had 12 employees.
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He applied innovation with his range of appliances with Zip's heaters easily fitted directly above the kitchen sink or bath
When he learnt a large block of units in Sydney was installing instant hot-water heaters, he conceived of the idea of instant boiling water, according to an obituary in the Australian Financial Review.
He first developed a cumbersome unit that sold only a few hundred, so he refined it and made a neater appliance he called the "Miniboil" - a white box on the wall with the red tap in office tea rooms.
Not only was the product more convenient because staff weren't waiting around for the jug to boil, Crouch's design delivered boiling water more efficiently. The first big contract was with the Commonwealth Bank.
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Zip Industries secures new premises through Savills

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Air-conditioning giant Daikin has secured two new industrial trade centres, in Brisbane and the Gold Coast, just before the onset of the summer season.
Daikin had tasked Savills to assist with finding suitable facilities.
The deals were negotiated by Savills’ Shaw Harrison and Callum Stenson.
Both of the new Daikin stores open this month, with the Brisbane store located at 1/210 Robinson Road in Geebung totalling 710 sqm, and the Gold Coast store located at 26 Lawrence Drive in Nerang totalling 809 sqm. 
It will pay a combined rental of $263,750 per annum.
Daikin has committed to a three-year lease on both properties.
“While Daikin were particularly specific with their requirements we identified well over 20 suitable locations after conducting an extensive market search,” Harrison said.
The Geebung property was vacant prior to Daikin signing the lease, and the property owner assisted with renovating the building to suit Daikin’s showroom fit-out requirements. 
“The main road frontage along Robinson Road was exactly what they were seeking for their Brisbane display centre, with other trade-based industry users also located along this busy strip,” Harrison said.
The newly constructed Nerang facility in the Gold Coast was being marketed by GC Commercial after the previous tenant was involved in a major fire which required the building to be completely rebuilt. 
 
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Daikin sets up new offices in Brisbane and Gold Coast ahead of summer

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Current pre-lease rentals on offer to lease new warehouses in Melbourne and Brisbane offer a good opportunity for tenants to upgrade, according to forecaster BIS Oxford Economics.
Leasing incentives in both markets have pushed effective rents to around their lowest levels in 10 years, with little change in stated rents over the 10-year period. Since 2007, average prime net effective rents in Melbourne’s South-East and Brisbane’s TradeCoast have fallen by 15 to 18%. 
Compounding the situation, stated rentals for a new lease are substantially below the rent being paid by tenants coming to the end of a long term lease, said BIS Oxford Economics.
For a tenant who signed a lease over a prime property in Melbourne’s South-East in 2007, with annual escalations of 3%, would be paying 25% above the current market rent for existing space. 
In Brisbane’s TradeCoast, the situation is even worse, with the tenant ending their lease paying an estimated 35% above market rents. It makes sense that companies would find the option to upgrade to newer, more efficient facilities at a much lower rent very appealing. 
The findings were carried in the BIS Oxford Economics’ latest reports on the sector, Melbourne and Brisbane Industrial Property, Market Forecasts and Strategies, 2017 to 2027.
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However, the forecaster says the pre-lease deals on offer will not last indefinitely.
Over the last five years, major developers in Brisbane and Melbourne were able to use firming yields and rising capital values, underpinned by the strength of the investment market, to fund leasing incentives, whilst keeping a lid on pre-lease rents. The competition in the pre-lease market kept market rents subdued. 
But developers’ calculations will change when yields stop firming and start to soften, as forecast over the next five years. Without firming yields, developers will no longer be able to fund such generous leasing incentives and will need higher rents to underwrite project feasibility. Rising pre-lease rents will then filter through to the existing market. 
According to report authors, Lee Walker and Christian Schilling, the key trigger for the change in developer behaviour will come from rising Australian 10-year bond rates, which have a positive correlation to industrial yields. 
Even so, the forecast rise in bond rates will take time to change developer behaviour and the pre-lease deals they offer. 
Whilst BIS Oxford Economics consider it will be business as usual for the next 12 to 18 months, the generous leasing deals will gradually start to evaporate. With leases typically involving a long term commitment, tenants looking to upgrade would be advised to take advantage of the generous leasing incentives and rents whilst they are still around. 
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Industrial tenants should capitalise on pre-lease offers in Melbourne, Brisbane: BIS Oxford Economics

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A sizeable industrial office/warehouse located within Tullamarine’s logistic hub has just been leased.
The property, <a href="https://www.realcommercial.com.au/property-industrial+warehouse-vic-tullamarine-502366274" target="_blank">Unit 3 at 71-93 Western Avenue</a>, has an area of 2,260 sqm and is close to the Tullamarine Freeway offering easy access to the Melbourne Airport, multiple freeway linkages and the CBD. 
The lease to a freight forwarding and logistic company was for $185,320 per annum net on a three year term plus one.
The leasing agent was Anthony Carbone of CVA.
The building has an eight metre high clearance warehouse and first floor open plan and partitioned air-conditioned offices.
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Tullamarine warehouse leased for over $185,000 p.a.

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Three new tenants have moved into Frasers Property Australia’s Key Industrial Park in Melbourne’s Keysborough. 
The tenants are driveline products manufacturer Dana Australia, Licensing Essentials and hardware supplier Pinnacle Diversity.
Key Industrial Park is nearly 100 hectares of Industrial 1 zoned land with major frontages to Greens Road, Perry Road. It is Melbourne's South East benchmark in industrial development and provides access to EastLink and all other major road networks and proximity to the main port, airport and CBD.
Leading driveline products manufacturer, Dana Australia, has signed a seven-year lease for a 10,000 sqm facility comprising 8,972 sqm warehouse and 1,028 sqm office plus 100 car spaces. 
Licensing Essentials has also entered into a seven-year lease for 8,120 sqm space comprising 7,720 sqm warehouse and 400 sqm office.
Pinnacle Diversity committed to a five-year lease. The company will supply and distribute home hardware products from its 7,242 sqm premises comprising 6,842 sqm warehouse, 400 sqm office.
“We are very pleased with the level of activity at The Key Industrial Park with all three companies committed to leases prior to practical completion,” said Anthony Maugeri, general manager Southern Region C&amp;I for Frasers Property. “The lack of land and quality warehouse facilities in Melbourne’s South-East has helped us secure the most recent deals,” 
Dana was a pre-commitment with Frasers Property speculatively building two tenancies adjoining this building. These buildings were both leased prior to completion. Dana and Licensing Essentials recently moved in and Pinnacle Diversity is expected to move in soon.
The three new tenancies are located on Hudson Court. 
The deals were negotiated by Ben Fahey and Andrew Hanna from Frasers Property, Kosta Finn from Savills, Danny Green from Cushman Wakefield and Matt Ellis from JLL.  
The Key Industrial Park has been developed to accommodate purpose built facilities for Adairs, Symbion, AstralPool, BIC Oceania, TriMas, Early Settler, Rinnai, Sealy, Miele &amp; DANA.
 
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Three new tenants move into Key Industrial Park in Melbourne's Keysborough  

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Swedish hi-tech engineering firm Sandvik has agreed terms on a new five-year lease for an industrial facility at Mulgrave in Melbourne’s south-eastern suburbs.
Located in Gilda Court, the 520 square metre building includes 400 square metre of office space and 120 square metres of warehousing.
The deal was brokered by Savills' Daniel Kelly and Lynton Williams.
Sandvik, which will relocate from Dandenong, will pay circa $100,000 per annum net.  
Sandvik employs around 46,000 people worldwide and makes equipment for metal cutting, mining and construction.
The lessor was a Melbourne-based investor. 
 
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Swedish engineering firm switches to Melbourne's Mulgrave

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Indie game developer Halfbrick Studios will open its doors at the former Sunny Queen Eggs home in Brisbane's Red Hill.
Halfbrick Studios – creator of the best-selling Fruit Ninja video game – has signed a five-year lease for an annual rental of $450,000 gross per annum.
Previously occupied by Sunny Queen Eggs, the 2,200 square metre building at <a href="https://www.realcommercial.com.au/property-industrial+warehouse-qld-kelvin+grove-501230671" target="_blank">25 Musgrave Road</a> has been completely retrofit, with a $5.5 million fitout and refurbishment undertaken by engineering contractor John Holland.
The deal was brokered by CBRE’s Mel Pikos and Michael Skarparis.
“Following the immense success of Fruit Ninja, which has been downloaded more than one billion times, Halfbrick Studios has experienced exponential growth, and, as a result, required additional facilities that would enable further expansion,” Pikos said.
Fruit Ninja is the second highest-selling game of all time on the iOS platform, says the gaming company's website.
“Some of the key building features that appealed to Halfbrick include the exposed ceiling grid spray painted black, large internal stair with void, multiple break-out and chill-out zones, large rooftop area overlooking the Brisbane CBD, and even an original chick-hatchery room that has been converted to a meeting room,” he said.
Skarparis said the deal was evidence of Brisbane’s increasing appeal as an IT and gaming destination.
“In 2015, Brisbane has emerged a hub for computer game and app developers, with deals negotiated to Halfbrick Studios for 2,200 square metres, Gameloft for 650 square metres, and Red Eye Apps for 355 square metres,” he said.
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