WAREHOUSING IN AUSTRALIA

ONTHE

UPAND

UP THE RISE OF MULTISTOREY

WHAT ARE MULTISTOREY WAREHOUSES?A multistorey warehouse is a warehouse consisting of more than one level, increasing

the usable floor space per square metre of land.

WHAT ARE THE DRIVERS OF MULTISTOREY?

DO OCCUPIERS UNDERSTAND WHAT MULTISTOREY IS?

Are aware of multistorey warehouses

Found them appealing

Would consider

90% 29% 25%

INTERNATIONAL BEST PRACTICEMany Asian cities where available land is limited and site costs are high already

have established multistorey warehouse networks, some over 20 stories tall. These countries include:

Hong Kong China Singapore Japan South Korea

Photo credit: Goodman Business Park

Source: CBRE Industrial and Logistics Occupier Survey, 2016

DEVELOPERS• High land costs• Limited land availability and small

site areas in key locations

OCCUPIERS• Connectivity to population centres • Reduce rents• Reduce cartage and container costs

through optimal network location

CAN THE INVESTMENT METRICS STACK UP IN AUSTRALIA?Despite strong growth, land values in Australia are still approximately 6.9 TIMES lower per square metre than Asian cities such as Hong Kong. The lack of urgency for multistorey development in Australia can be attributed to the elevated costs of construction compared with single storey warehouses and the existing availability of land.

Analysis in SOUTH SYDNEY and INNER MELBOURNE across four scenarios were assessed to determine whether multistorey development in Australia is feasible given the current cost of land and associated construction costs.

THE BENEFITS ARE DRIVING OCCUPIER DEMAND RISE OF E-COMMERCE- Online spending in Australia currently accounts for approximately 9% of all retail trade, a figure expected to rise to 12% by 2022. CBRE forecasts an additional 350,000 square metres of distribution space will be required in Australia annually to service growth in e-commerce, with South Sydney and Inner Melbourne to be amongst the highest growing areas in the country.

HOW WILL FAST DELIVERY IMPACT INDUSTRIAL AND LOGISTICS PROPERTY?

5%

23% 2%

70% of consumers are content with the cheapest form of home delivery

would pay more for reliable, timed delivery

of consumers are willing to pay extra for same-day delivery

would pay more for instant deliverySource: McKinsey

CONSUMER EXPECTATIONS ARE CHANGING QUICKLY

View our full report at: WWW.CBRE.COM.AU/RISE-OF-MULTISTOREY

Inventory

LabourTransportation

Occupancy

Other

5%

15%

20%

10%

50%

of industrial real estate decisions are impacted by supply chains100%

CONCLUSION To date, the concept of multistorey warehousing has seen limited take-up in Australia due to the availability of relatively cheap and developable land. Current rent growth forecasts will support higher associated land and construction costs, providing positive conditions for the rise of multistorey warehousing. Industrial regions with good accessibility to ports and customer bases such as Inner Melbourne and South Sydney will likely be the first to market by as early as next year.

Source: CBRE Research