Strong demand for industrial warehouses and distribution centres in Sydney’s west is being powered by the growth in online retailing, a commercial real-estate services firm says.
A recent report by CBRE Australia found that the effective storage and distribution of goods bought online remained a key challenge confronting online and cross-border retailers.
CBRE Industrial and Logistics Services, Associate Director, Michael O’Neill says the trend toward online retailing is leading a number of retailers to increase their storage space.
Sydney’s central/outer west and southern sub-regions remain hot spots, he says, as industrial tenants with connections to online retailing seek quality facilities that are appropriately located around port and major transport links.
“Over the past 12 months businesses aligned to online sales have leased in excess of 50,000 square metres in western Sydney,” O’Neill says. “Based on the current enquiry we expect this level of activity will continue throughout 2012.”
Recent deals in which CBRE has been involved include a six-year lease agreement with warehouse management solutions provider Order Management Solutions for a 5,242 square metre warehouse facility in Homebush and a five-year lease agreement with national home delivery service operator Webgistix for a 5,238.9 square metre A-grade warehouse in Camellia. In addition, CBRE says, Australian online shopping company brandsExclusive has expanded its facilities in Libscombe.
CBRE senior manager of industrial and logistics services Shaun Timbrell says demand is being driven by increasing tendencies among local and international retailers to adopt multi-channel retailing strategies as a means of reaching a wider audience of buyers. He adds that this has led to increased storage and transportation requirements.
“Developers are looking to capitalise on increased demand with a number of major distribution centres for larger logistics operators and retailers due for completion in 2012,” Timbrell says. “A lack of significant industrial new supply over the past two years has led to pent up demand from storage and logistics providers. However, improving market fundamentals, stronger tenant demand and more favourable economic conditions are expected to drive a considerable pick-up in development activity, particularly in Sydney’s outer west.”