High demand for large distribution and warehouse facilities

Demand for large distribution and warehouse facilities is expected to continue its strong run due to pressure on national supply chains.

Luke Crawford, research at Colliers International associate director said last-mile locations for food companies, logistics companies and warehousing has shown how important distribution and warehouse facilities are in times of “social distancing” and keeping the supply chain open.

“The panic buying of consumer staples during uncertain times like these has put food manufacturers and suppliers in the position of making sure their network of distribution and warehousing facilities are adequate to handle these types of demand spikes on a regional basis,” he said.

The latest Colliers International radar paper ‘COVID-19 Industrial Implications’ found that due to the recent growth in demand for transport and logistics, its industrial property will remain secure through the months ahead.

It is expected that some companies may need to expand their industrial footprint in metro areas to keep up with the increased demand.

In late March Coles announced it will open three ‘pop-up’ distribution centres in New South Wales, Victoria and Queensland to cater towards the rapid growth in food and grocery purchases.

Colliers paper notes that the e-commerce sector in particular, continues to expand structurally, and the coronavirus outbreak is expected to result in a pick-up in online retail sales and subsequent demand for industrial space.

“With stores adjusting their hours and political leaders asking the public to stay home, the value of e-commerce has increased exponentially,” Crawford said.

Malcom Tyson, Industrial at Colliers International managing director said notwithstanding the short-term impacts, fundamentals within the Australian industrial and logistics market remain favourable with several structural and cyclical changes playing into the hands of the sector.

“Bringing it back to basics, the key drivers of the industrial market in recent years have been population growth, infrastructure investment, growth in e-commerce and low cost of debt,” he said.

Malcom said that although population growth is expected to take a hit over the short term, as net overseas migration drops significantly off the back of travel restrictions and the closure of the Australian borders to non-citizens, the outlook for the other key drivers in the current environment remains unchanged.

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