MARKET TRENDS
While Australia's industrial property market remains among the most sought after sectors, end-user demand for efficient logistics continues to grow over the holiday season to cater for the elves’ busiest time of the year.
While e-commerce sales are expected to peak this holiday season, the sector is also projected to continue growing to AU$35.2 billion by 2021.
ELVES NEED WAREHOUSE SPACE TOO!
This year has already seen major growth in leasing activity over the year, with JLL (2019) predicting national leasing volumes to reach similar levels to the 10-year annual average (2.1 million sqm) by the end of the year.
Rising e-commerce and population growth continue to drive up demand for warehouse space in the following years.
Source: JLL
WHY?
JLL estimates that Australia's role in global investment is among the top five global industrial transaction volumes.
Population and household consumption growth.
Strong demand, coupled with the limited supply of stock have translated to strong appreciation in land, rent and capital values, and downward pressure on transaction yields.
Exponential growth in online retail sales in Australia, resulting in growing industrial space demand.
National and State government investments in new infrastructure projects and strategies.
HOW DO WE SUPPORT THAT?
Implementation and growth of the ‘Last Mile Freight’ principle through city planning and increased attention towards micro distribution centres in a more localised delivery network.
Emphasis on supply chain efficiency in order to deliver goods with speed and agility to Australian consumers.
Purpose-built warehousing, including cold storage facilities to support food and grocery sector.
CBRE reports that large scale multi-storey developments will start to become feasible as land becomes more in demand.
Prioritising Green Infrastructure in future industrial development is crucial to offset much of the environmental and economical impacts of the logistics sector.
CURRENT KEY INDUSTRY DRIVERS
THE RISE OF ONLINE RETAIL
Australia’s growth in online retail sales % from 1.8% to 5.5% (between 2013 and 2018) was achieved faster than the US. (JLL, 2018)
CBRE has determined that e-commerce will create demand for an additional 350,000 sqm of new industrial and logistics space in Australia each year until 2022.
KEY CONSUMER TRENDS - WHY ARE WE SHOPPING ONLINE?
New payment services: Buy Now, Pay Later (BNPL) has continued to gain momentum in the Australian online retail market, especially for the 18 - 39 year old demographic. December is the most expensive time of the year for most; such services make cash flow just a tad easier to manage.
Making purchases on mobile phones has become more user friendly and secure. Mobile phones allow for online purchases to be made whenever, and wherever.
Laziness (and equally, we’re a lot more busy!)
Source: JLL
BUYING FOOD….. FROM HOME?
Australia’s food and groceries shopping expenses currently amount to 23% of all shopping expenses at a total of $173 billion AUD. Online grocery sales are projected to increase at an annual rate of 15% over the next 5 years (JLL, 2018).
To successfully grow, this platform requires the logistic scale and strength, thereby further placing demand pressures for industrial floorspace within the transport, logistics and retail sector users, and particularly for cold storage facilities and purpose-built warehousing.
Australian Online Shopping Spend by Category of Goods
Source: JLL