Realterm Enters Australia With Sydney Outdoor Storage Buy Alongside Partners Group

Realterm has acquired a Sydney outdoor storage facility under its logistics joint venture with Swiss private equity firm Partners Group, marking the US investment manager’s first acquisition in Australia.

The asset provides 41,490 square metres (446,595 square feet) of industrial outdoor storage space at 77 Governor Macquarie Drive in the southwestern Sydney suburb of Chipping Norton, Realterm said Wednesday in a release. The deal value was not disclosed.

The property sits near Sydney’s main arterial routes, including the M5 transport corridor, and is leased to four occupiers using the space for construction material storage, container storage and truck parking. The site represents one of the last remaining sizable land parcels in the Chipping Norton submarket capable of accommodating single-occupier mandates of 40,000 square metres, according to Realterm.

“Sydney’s southwest industrial submarket has experienced strong market rental growth, has near zero vacancy, and is experiencing significant supply demand imbalance for this asset type, providing a strategic opportunity for Realterm to enter the Australian market,” said Bastian van Halder, managing director for Asia Pacific at Realterm.

Fast-Growing Niche

Headquartered in the US state of Maryland, Realterm manages more than $11 billion worth of what it calls transportation-advantaged properties. The firm founded by John Cammett and Ken Code has been actively seeking investment opportunities in well-located industrial markets.

Industrial outdoor storage has emerged as a high-growth niche driven by businesses demanding outdoor spaces for goods, equipment or vehicles. These unglamorous properties — typically located in industrial areas or regions with easy access to transport routes, ports and distribution hubs — have attracted the interest of blue-chip investors in the US and Britain, according to Savills.

“There is also potential for building portfolios here in Asia Pacific, which will take time due to the fragmented nature of current ownership,” said Simon Smith, Savills’ APAC head of research and consultancy. “However, the growth in specialist funds elsewhere in the world demonstrates that this is a sector with potential.”

The facility at 77 Governor Macquarie Drive enjoys convenient access to Melbourne via Australia’s Hume Highway, with the journey taking less than nine hours by car. The property is also central to Sydney’s infrastructure nodes of Port Botany and the Moorebank and Enfield Intermodals, two key logistics hubs.

“Logistics space is in strong demand in the wider Sydney area due to a lack of supply and limited new stock coming online,” said John Dixon, a member of management for Asia private real estate at Partners Group. “We have thematic conviction in the logistics sector globally and will continue to look for opportunities.”

CBRE reported last June that Sydney’s industrial vacancy rate of 0.2 percent was the lowest of any global city and likely to remain below 2 percent over the next two years amid a high level of pre-committed development supply.

Swiss Giant’s Moves

Partners Group had $147 billion in assets under management at the end of last year. The Swiss giant’s Asia Pacific investments have included a majority stake in Beijing’s Dinghao Plaza commercial complex and an interest in an office tower at 73 Miller Street in North Sydney, with the firm and JV partner ESR exiting the latter in 2022.

In November that same year, Partners acquired US data centre operator Edgecore Digital Infrastructure in a $1.2 billion deal, taking over a hyperscale specialist co-founded by Singapore sovereign wealth fund GIC.

The deal gave Partners ownership of Edgecore’s 476-megawatt portfolio, including a hyperscale campus in Arizona and a trio of development projects across Virginia, Nevada and Silicon Valley, with the firm planning to expand the platform with more projects across North America.