Brickworks and Goodman joint venture secures long-term Amazon lease in Sydney

Brickworks Goodman Group ASX BKW GMG JV Trust Amazon Oakdale West Estate Western Sydney
Amazon’s state-of-the-art 54,000sqm distribution facility is planned for completion in Sydney’s Oakdale West by mid-2021.

Online retail giant Amazon has unveiled plans to bolster its Australian distribution capability by opening a new scalable facility in Sydney’s Oakdale West in partnership with a property trust operated by brick manufacturer Brickworks (ASX: BKW) and commercial property company Goodman Group (ASX: GMG).

Market commentators and analysts were in an expectant mood this week following last week’s news reports on Amazon’s potential expansion plans.

The media attention led to Brickworks issuing a statement in an attempt to quell speculation, confirming it is “in advanced discussions with a customer for a warehouse development at Oakdale West” but stopping short of naming the US company.

This morning’s announcement dispelled all the rumours and confirmed Amazon was in fact shopping for a preferred site to build its new distribution facility – and may still opt to open a further site in Melbourne.

Operating through JV Trust, a trust that currently manages almost $3 billion in assets, Brickworks said the move put the development “at the forefront of [an] e-commerce revolution”.

The news also reaffirms the continuing rush away from physical sales towards online shopping, largely fuelled by the ongoing restrictions as a result of COVID-19.

According to Brickworks, the lease agreement with Amazon covers land that was sold by the company into the JV Trust in 2016, with infrastructure works to the estate commencing following development approval being secured.

Soon after market open this morning, Brickworks announced it has secured a pre-commitment for a 20-year lease from Amazon, with a view of building a state-of-the-art distribution facility on land spanning almost 15 hectares (150,000sqm) by the second half of 2021.

“We are also excited by the design of the facility, which responds to the increasing need for technology innovation from our customers,” Brickworks managing director Lindsay Partridge said.

“This project will deliver profit during the development phase and further rental income for the Property Trust once complete,” he added.

Building up

According to early plans, the new facility will have a base floor area of 53,500sqm with a 26m high-bay facility comprising three mezzanine levels providing a total of 191,170sqm of usable floor space.

The US e-commerce company will be the second customer to pre-commit to Oakdale West, following Coles Group’s (ASX: COL) announcement it would base distribution operations from the site in January 2019. If taking both facilities into account, Brickworks said it estimates the gross assets held within the various JV Trust assets across Western Sydney and Brisbane is “expected to exceed $3 billion”.

“We are at the forefront of the e-commerce revolution, with our facilities playing a pivotal role in helping our customers meet the supply chain needs of this new economy,” Mr Partridge said.

“Brickworks is delighted to further strengthen the JV Trust by securing this significant pre-commitment. Amazon is well known around the world as a symbol of the accelerating trend to online shopping,” he added.

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