ESR president Phil Pearce is bullish about demand for logistics space.
The surge of Japanese investment into local commercial property markets shows no sign of letting up with Mitsubishi Estate Asia again backing a development in the relatively new field of logistics.
The group, which initially emerged as the backer of high-rise projects ranging from offices, including the Salesforce Tower in Sydney, to residential schemes, like Lendlease’s planned luxury project overlooking Sydney’s Hyde Park, has spread its wings into new areas of property.
Japanese companies are now focused on backing commercial developments and owning income-producing assets rather than investing in costly resort and golf course projects as they did in the 1980s.
Mitsubishi Estate Asia is now working with Asian warehousing giant ESR on developing a $700m logistics estate in the western Sydney suburb of Huntingwood, aiming to capitalise on rising demand for space.
The tie up is the second joint venture between the two companies as they target high-demand logistics development opportunities along the east coast.
ESR and MEA’s other venture is a $175m estate in the Melbourne suburb of Pakenham.
Mitsubishi Estate Asia head of Australia Yosuke Matsunaga said the partnership was in line with MEA’s strategy to deepen its exposure to Australia’s logistics sector.
The firm also has a venture with property funds house Charter Hall to back a logistics centre in Melbourne and its forays are often followed by other groups from Japan.
“We are confident that this partnership will further strengthen the relationship between ESR and MEA. Huntingwood offers everything we look for being scale, location, and a development partner with a proven track record. We look forward to delivering something exceptional here,” Mr Matsunaga said.
An artists impression of the planned ESR Huntingwood logistics estate.
ESR president Phil Pearce said the partnership demonstrated continued investor confidence in his company’s Australian platform and development capability. “This is our second partnership with Mitsubishi Estate Asia in the past two years, and the Huntingwood investment is clear testament of the strength and momentum of this relationship,” Mr Pearce said.
He described Huntingwood as a premium logistics site “in one of Sydney’s most sought-after industrial precincts”.
“We’re excited to deliver a best-in-class estate alongside a partner who shares our vision for world-class developments in Australia’s key growth markets,” he said.
The ESR Huntingwood Development Partnership will turn the 18.3ha site into a premium, multistage logistics estate, with building to kick off in the second half of the year, and the warehouses to be completed from mid-2027 onward.
The estate will have up to 114,005sq m of warehousing space and is expected to win local and international customers seeking modern facilities with direct access to the M4 Motorway and Great Western Highway.
The partners are looking to capitalise on the demand for premium logistics space, backed by ESR’s development pipeline of more than $10.2bn across Australia and NZ.
ESR last year kept the Huntingwood site under its control after striking a deal worth more than $300m for the land. Colliers agents Gavin Bishop and Sean Thomson and Cushman & Wakefield agents Tony Iuliano and David Hall handled the deal.
Private equity firm KKR and UAE sovereign wealth fund Mubadala Investment Company sold out after backing the site’s purchase by a predecessor firm, Logos, for $236m in 2022. Logos was later acquired by ESR as part of a wider corporate transaction.
Huntingwood Logistics Estate is well-connected to key freight corridors and is near the future Western Sydney International Airport.
Western Sydney has low vacancy across core industrial precincts, with limited serviced land available, and many sites have been targeted by data centre developers.