Contents. Outer West Overview. Market Overview Commentary. Have You Heard... Key Pending Opportunities / Vacancies 10,000Sqm+

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1 Outer West Q2 2018

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3 Contents 4 Outer West Overview 5 Market Overview Commentary 7 Have You Heard... 8 Key Pending Opportunities / Vacancies 10,000Sqm+ 10 Q Major Leasing Transactions Month Major Transaction Statistics* 14 The Spec Truth 16 Case Studies 18 Idiosyncratic Factors Driving Industrial Automation 19 The Western Sydney Team

4 Outer West Overview Vacancy Incentive A-Grade vacancy has fallen to 1% in Western Sydney B-Grade vacancy has increased to 6% in Western Sydney Vacancy Incentive Spec / Existing down by 2% to Average of 12.5% Prelease up by 3% to 17% Spec Developments Approximately 150,000sqm of speculative developments currently with DA or under construction and PC due by Q Spec Developments Developable Land Developable Land Supply decreasing in availability Increase in average price of 2-5ha parcels from $435/sqm to $525/sqm Supply & Demand Take up of A-grade industrial stock in the outer west over the past 12 months in major lease transactions was 400,000sqm, the average size was 12,500sqm Supply & Demand Rents Rents Rents have climbed in the first half of 2018 and growth looks set to continue with solid demand. *Data source JLL 5,000sqm + lease transactions 4 Industrial Outer West

5 Market Overview Commentary Demand The Outer West continues to record high levels of activity, accounting for more than 50% of total take-up in 2Q18. The four largest leases recorded in the Outer West over 2Q18 were a pre-lease to DHL at Goodman s Oakdale South, Kemps Creek, CS Logistics at Goodman s 6 Interchange Drive, Eastern Creek, Beaumont Tiles pre-lease at DEXUS Quarry Estate, 2-6 Dolerite Way, Greystanes and ACR Supply Partners pre-lease at Altis First Estate, Erskine Park. Year to date take-up has totaled approximately 170,000sqm. Occupier activity has exceeded 400,000sqm over the past three years and remains on track to repeat the trend in Continued downward pressure on both prime and secondary vacancy is expected to remain, given the robust occupier demand this year. Supply Approximately 115,000sqm of stock across four projects completed in the Outer West precinct in 2Q18 with 77% of this space pre-committed. This takes the year to date stock additions to approximately 223,000sqm. Projects completed in 2Q18 include Lot 3 at Goodman s Oakdale South, Kemps Creek, Warehouse 3 at Frasers Horsley Drive Business Park, Horsley Park, Lot 6 at Frasers EC5, Eastern Creek, and Building 3A at Altis First Estate, Erskine Park. There is 268,000sqm of supply under construction and expected to complete by 1Q19. Approximately 108,000sqm of this supply is being constructed speculatively. There is a further 200,000 sqm of projects with plans approved, which are expected to complete by Industrial Outer West 5

6 Asset performance and what is driving rents higher? Average prime indicative rents in the Outer West appreciated over 2Q18 to an average net rent of $118/sqm per annum. Prime rental growth continues to be driven by robust occupier demand which has led to an increase in net rents along with better product being delivered with higher clearances, super canopies and with the addition of Trade Centres. Secondary net rents remained stable over the quarter. Vacant stock tends to be corporate style with larger office to warehouse ratios. JLL operatives noted that the vacancy in the market continues to be low with scarce prime grade options for larger space requirements. This will continue given the timing of the supply of speculative stock. A shortfall in stock for tenants seeking immediate relocation will drive rental growth in the near-term. Rate ($/sqm) $120 $115 $110 $105 $100 $95 $90 $85 Prime Existing Net Rent Secondary Existing Net Rent 6 Industrial Outer West

7 Have You Heard... DEXUS secured a new 13,700 sqm pre-lease with Beaumont Tiles at Quarry at Greystanes Goodman leased 16,000 sqm of 6 Interchange Drive, Eastern Creek to CS Logistics ISPT secured a 12.9 hectare brownfield site at 44 Clunies Ross Street, Greystanes from Boral for circa $61 million Mirvac leased their 20,915 sqm spec development at Calibre Estate, Eastern Creek to Pet Circle. Altis leased their 12,500 sqm spec development at First Estate, Erskine Park to 3PL company ACR Supply Partners. Industrial Outer West 7 7

8 Key Pending Opportunities / Vacancies 10,000Sqm+ HOA signed by JLL HOA signed 12,000sqm via JLL HOA signed by JLL Property: 43 Newton Road, Wetherill Park Owner: 151 Property GLA in sqm: 10,908sqm Asking Rent: $125/sqm JLL Comments: A-grade tenancy is available now. Owned by 151 Property, the clearspan warehouse offers high internal clearances and excellent access. Property: Building 3B First Estate, Erskine Park Owner: Altis GLA in sqm: 12,295sqm Asking Rent: $118/sqm JLL Comments: ACR Supply Partners will occupy the quality building. Property: Stage 5, Eastern Creek Owner: Frasers GLA in sqm: 13,050sqm Asking Rent: $120/sqm JLL Comments: Frasers is speculatively developing EC5. The facility is located at the back of Rhino Rack. Property: 51 Eastern Creek Drive, Eastern Creek Owner: DEXUS GLA in sqm: 11,893sqm Asking Rent: $120/sqm JLL Comments: Existing building. Available now. Property: 1B Huntingwood Drive, Huntingwood Owner: GPT GLA in sqm: 11,260sqn Asking Rent: $125/sqm JLL Comments: GPT is speculatively developing 1B Huntingwood Drive. The property has excellent exposure and access to the Great Western Highway. Property: Building 5 Calibre Estate, Eastern Creek Owner: Mirvac GLA in sqm: 22,271sqm Asking Rent: $125/sqm JLL Comments: Mirvac is speculatively developing building 5. The property has excellent access. 8 Industrial Outer West

9 Key Pending Opportunities / Vacancies 10,000Sqm+ Property: 28 Britton Street, Smithfield Owner: Goodman GLA in sqm: 12,938sqm Asking Rent: $115/sqm JLL Comments: Goodman owned property offers 9.4 metre clearances, full B-double access and is available late Property: EC5 Business Park Owner: Frasers GLA in sqm: 15,960sqm Asking Rent: $125/sqm JLL Comments: Available Q Frasers is speculatively EC5. The facility is located next to FDM Property: 1 Wonderland Drive, Eastern Creek Owner: Private GLA in sqm: 9,400sqm Asking Rent: $125/sqm JLL Comments: Available May Excellent location Property: Lot 21 Old Wallgrove Road, Eastern Creek Owner: GPT GLA in sqm: 15,000-30,000sqm Asking Rent: $120/sqm JLL Comments: GPT is speculatively developing Lot 21 Old Wallgrove Road as one option of 30,000sqm, or two options of 15,000sqm each. The property offers high internal clearances and has prime exposure. Available late Property: 300 Victoria Street, Wetherill Park Owner: Charter Hall GLA in sqm: 11,460sqm Asking Rent: $115/sqm JLL Comments: The site is owned by Charter Hall and offers high internal clearances, with the ability to develop further expansion space at the rear. Property: Quarry at Greystanes, 2-6 Dolerite Way, Greystanes Owner: DEXUS GLA in sqm: 9,500-20,110sqm Asking Rent: $135/sqm JLL Comments: Last 2 spec development opportunity in the Quarry. Available March 2019 Industrial Outer West 9 9

10 Q Major Leasing Transactions Quarry at Greystanes, 2 Dolerite Way, Greystanes Owner: DEXUS Rate: $135/sqm GLA in sqm: 13,700sqm Incentive: 15% Tenant: Beaumont Tiles Leased by: Peter Blade and Greg Pike Calibre Estate - Building 3, 60 Wallgrove Road, Eastern Creek Owner: Mirvac Rate: $122.50/sqm GLA in sqm: 20,915sqm Incentive: 15% Tenant: Pet Circle Leased by: Tenant Rep 10 Industrial Outer West

11 Q Major Leasing Transactions First Estate - Erskine Park Owner: ALTIS GLA in sqm: 12,295sqm Tenant: ACR Supply Partners Rate: $117/sqm Incentive: 13.5% Leased by: Peter Blade and Greg Pike 6 Interchange Drive, Eastern Creek Owner: Goodman Rate: $115/sqm GLA in sqm: 16,000sqm Incentive: 12% Tenant: CS Logistics Leased by: Colliers Liverpool Industrial Outer West 11

12 12 Month Major Transaction Statistics* Market Share Relocated From JLL Outer West 6% 6% 6% 6% 3% 35% CBRE Colliers Direct Savills Tenant Rep 9% 9% 3% 3% 3% 37% New Metro West North West Central West South West 15% 23% LJ Hooker Knight Frank 12% 24% South Sydney North Sydney 12 Industrial Outer West

13 12 Month Major Transaction Statistics* Term Industry Type 5 Years 3PL 12% 6% 3% 37% 7 Years 10 Years 3 Years 15 Years 12% 3% 3% 28% Warehousing MFG/Prod Wholesale Retail 21% 21% 12 Years 27% 27% Not Determined *Major Transaction is defined as any Industrial lease in the Outer West over 5,000 sqm Industrial Outer West 13

14 The Spec Truth Who s Spec ing? Lease Terms Secured Stockland 10 Years 8%7% 9% 10% 6% 5% 11% 21% 12% 15% LOGOS Goodman GPT Fife Capital Mirvac DEXUS Altis Frasers Charter Hall 7%3% 3% 21% 3% 3% 2% 2% 21% 34% 5 Years 7 Years 3 Years 9 Years 12 Years 15 Years 20 Years 11 Years 2 Years Average Rental Compared to Incentive *Data based on JLL speculative success Industrial Outer West

15 The Spec Truth Upcoming Speculative Stock Owner Development Address Building Size (m²) PC Expected Altis First Estate Mamre Road, Erskine Park Building 4A 12,320 Q2 19 Building 6B 4,764 Q2 19 Rosehill Distribution Centre 8 Colquhoun Street, Rosehill 2,990 Q1 19 Charter Hall Building 1B 3,500 Q1 19 Chullora Logistics Park 2 Hume Highway, Chullora Building 4B 7,250 Q1 19 DEXUS Quarry at Greystanes 2-6 Dolerite Way, Greystanes 4 Dolerite Way 9,500 Q Dolerite Way 10,610 Q1 19 Fife Capital Yennora Logistics Hub 7 Dursley Road, Yennora Building 1 26,200 Q4 18 Frasers EC5 Honeycomb Drive, Eastern Creek 15, Interchange Drive, Eastern Interchange Goodman Creek 21,200 Q2 19 Oakdale South Millner Avenue, Kemps Creek Building 1A 12,155 Q4 18 Lot 21 Old Wallgrove Road, Eastern GPT Creek 30,109 Q4 18 1B Huntingwood Drive, Huntingwood 11,260 Q3 18 LOGOS Marsden Park Logistics Estate Hollinsworth Road, Marsden Park Building 4 3,235 Q4 18 Hollinsworth Road, Marsden Park Building 6 11,715 Q4 18 Prestons Logistics Estate 34 Yarrunga Street, Prestons Building 1A 11,928 Q Yarrunga Street, Prestons Building 7 13,920 Q2 19 Mirvac Calibre 60 Wallgrove Road, Eastern Creek Building 5 22,271 Q1 19 Stockland 37 Stennett Road, Ingleburn 15,500 Q3 18 Ingleburn Logistics Park 39 Stennett Road, Ingleburn 21,350 Q3 18 Building 3 13,500 Q3 18 Yennora Distribution Centre Loftus Road, Yennora Building 11 9,100 Q3 18 Industrial Outer West 15

16 Case Studies Quarry at Greystanes - 2 Dolerite Way, Greystanes Beaumont Tiles in NSW has undergone significant growth in both their store network and range of products. This led to them outgrowing their existing facility at Huntingwood. Beaumont Tiles in conjunction with their consultants appointed JLL to identify, shortlist and negotiate on suitable alternative distribution centres. The end solution selected was a purpose built DC in the Quarry at Greystanes. The DEXUS design team was able to up-spec the height and floor load capacities and incorporate a trade retail outlet. Transaction Summary JLL Project Team Lessor: DEXUS Peter Blade Head of Industrial peter.blade@ap.jll.com Lessee: Beaumont Tiles Total building sqm: 13,700sqm Rent: $135/sqm Incentive: 15% Term: 12 years 16 Industrial Outer West Greg Pike Director, Industrial greg.pike@ap.jll.com

17 Case Studies First Estate, Erskine Park - ACR Supply Partners Property Details While experiencing consistent year-on-year growth as a well established 3PL provider working within the niche contract industry, ACR Supply Partners engaged JLL to secure a new distribution facility to have a consolidated operation. After an extensive search ACR decided to partner with Altis Property Group underpinning their first state-of-the-art designed spec warehouse facility at First Estate, Erskine Park. JLL Project Team Peter Blade Head of Industrial peter.blade@ap.jll.com Greg Pike Director, Industrial greg.pike@ap.jll.com Transaction Summary Lessor: Altis Property Group Lessee: ACR Supply Partners Total building sqm: 12,293sqm Rent: $117/sqm Incentive: 13.5% Term: 8 years Industrial Outer West 17

18 Idiosyncratic Factors Driving Industrial Automation Next Generation Workers: Rise in Occupier Demand: Recent advancements in technology have resulted in solutions with greater flexibility, capability and productivity. Meanwhile, acquisition and implementation costs have declined. According to a study conducted by Raconteur an estimated 60% of warehouse functions are to be replaced by various forms of technology. Workers Occupier Demand Multiple factors have contributed to a rise in occupier activity for certain markets: the rezoning of industrial land from inner city locations, a competitive pre-lease market, organic growth and consolidation mandates. E-Commerce Led Demand and Drive for Productivity: Recent advancements in technology have resulted in solutions with greater flexibility, capability and productivity. Meanwhile, acquisition and implementation costs have declined. According to a study conducted by Raconteur an estimated 60% of warehouse functions are to be replaced by various forms of technology. E-Commerce Land Values A Rise in Land Values: A demand-led expansion in development activity has occurred. In Sydney, there us above 568,000sqm of developments under construction which are expected to complete by the end of 2018; making it the largest year of supply since The higher demand for occupier and development stock has led to an appreciation of land values. The rise in rents and land values must be offset with increased asset productivity. Logistics Increased Investor Appetite for Logistics Assets: The underlying demand for industrial logistics assets in Australia has shifted. Over the past 15 years, distribution centres have been amongst the best risk-adjusted real estate performers. Investment allocations towards the sector have expanded in recent years. 18 Industrial Outer West *Data source JLL Research

19 Agency Greg Pike Outer West Industrial NSW Peter Blade Outer West Industrial NSW The Martin Breuer Analyst Western Alison Spiteri Analyst Luke Jackson North West Industrial NSW Scott Nienhuis Occupier Services Industrial NSW Michael Wall Head of NSW Industrial NSW Sydney Sarah Rizzotto Analyst Team Rebecca Walker Team Assistant David Lidgard Central West Industrial NSW Marco Chiodo Central West Industrial NSW Support Tracy Warren Team Assistant Nick Crothers South West Industrial NSW Jessica Male South West Industrial NSW Hayden Payne South West Industrial NSW Industrial Outer West 19

20 JLL Copyright 2018 JLL. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.