Goodman to turn Castrol HQ into last-mile logistics hub
Goodman Group has secured the platform for a major last-mile logistics estate just 30 minutes’ drive from the centre of Sydney after buying the national headquarters of Castrol Australia.
The 7.1-hectare property at 132 McCredie Road, Smithfield, in the tightly held Western Sydney industrial market, was acquired from BP Australia for $40.2 million. It sold with a two-year lease back to Castrol, which will pay annual rent of $1 million.
The Smithfield site was built as the national headquarters of Castrol in the 1960s.
Over this two-year period BP will remediate the site, paving the way for Goodman to develop a 30,000-35,000 square metre multi-unit logistics estate with an end value of around $120 million.
A spokeswoman from Goodman declined to comment.
The acquisition fits neatly into Goodman’s global focus on repurposing infill and brownfield sites (such as former factories and manufacturing sites) close to major urban populations for modern logistics and reducing the number of greenfield sites it develops.
Of Goodman’s $10 billion global pipeline of new developments, more than half are projects on infill or brownfield sites. In addition, around 40-50 per cent of Goodman’s $53 billion of assets under management have been identified as having higher utilisation or regeneration potential.
In Los Angeles, Goodman is turning a “cleaned up” former manufacturing site within 30 minutes of the Downtown area into a last-mile logistics hub capable of servicing 20 million residents with same-day deliveries, while on the bank of the River Seine in Paris a former dock site is being repurposed as a multi-storey logistics facility with an urban farm and huge solar plant on the rooftop.
Goodman will develop last-mile logistics on the site after it is remediated.
The Smithfield site is just 31 kilometres from the Sydney CBD, 7.5 kilometres from Parramatta and close to major roadways. It’s across the road from another Goodman regeneration project, Gateway@Smithfield.
The site was originally developed in the mid- 1960s by Castrol as its new Australian headquarters, serving as a blending and filling operation for 50 years and more recently as a bulk oil storage and warehouse operation.
The sale of the Castrol site was brokered by Roger Miller of JLL Industrial & Logistics. He declined to comment.
Sydney has become one of the most tightly occupied industrial markets in the world as rising online retail sales and increased stockpiling of goods has driven a surge in the take-up of warehouse space.
Sydney’s industrial vacancy rate halved to a record low of just 1.4 per cent over the six months to the end of March, while Melbourne’s vacancy rate plummeted to 1.55 per cent from 2.55 per cent over the same period, according to CBRE.
At the same time, demand for prime logistics assets and sites has surged, while yields have contracted significantly due to the increased competition.
JLL recorded a record $6.67 billion of industrial property transactions in the second quarter of 2021 following landmark deals like Blackstone’s Milestone portfolio, bought by ESR for $3.8 billion on a 4.5 per cent yield.
“The Australian industrial and logistics investment market is being driven by elevated occupier activity, robust property fundamentals and a positive population growth outlook,” said JLL’s head of capital markets for industrial and logistics, Tony Iuliano.
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