Case Study
Highest & Best Use / Change of Use

Archerfield was engaged by the Australian subsidiary of a multinational manufacturing and consumer products business to undertake a strategic review of its local real estate assets. The assignment was particularly focused on 10 hectares of a total 16 hectare of industrial zoned land located approx. 8 kms from the Sydney CBD.

The first stage of the assignment focused on a detailed assessment of the site’s highest and best use. This was determined to be a combination of Mixed Use (B4) and Medium Density Residential (R3) to provide for 1,600 dwellings and 5,000m2 of commercial/retail space.

Archerfield was then retained to implement the change of use strategy reporting directly to the Finance Director of the Australian operation. A team of consultants was assembled to act on behalf of the client under instruction from Archerfield. Detailed site investigations were undertaken to identify contamination risks and formulate remediation action plans, an indicative master-plan was developed to show the proposed location of buildings, roads and open-space, the capacity of surrounding road networks, inter-sections and services infrastructure was tested and a process of structured stakeholder engagement was undertaken at a community, Council and State Government level.

These work-streams led to a Planning Proposal to re-zone the site together with an indicative master-plan being prepared and lodged with the relevant consent authority. Council and the State Government subsequently resolved to review and amend the Local Environment Plan for the broader area in which the site was located, which led to the site being re-zoned as provided for in the Planning Proposal.

With the re-zoning and master-plan approval in place, Archerfield was then retained to conduct a ‘by invitation’ expressions of interest campaign to sell the site with vacant possession.  A detailed information memorandum was prepared by Archerfield and confidentiality arrangements were put in place with a group of pre-qualified potential buyers.

A short-list of parties were subsequently provided access to both the site and detailed due diligence material for the purpose of submitting final, binding offers. Contracts were negotiated and exchanged with a preferred party and the sale of the site was settled for $142 million, substantially in line with Archerfield’s original residual land value estimate.

Archerfield was re-engaged by the client two years later to realise the remaining 6 hectares of land.  This sale process was handled ‘off-market’ and realised a further $90 million.