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Online sales surge to result in record industrial leasing demand

A record year of leasing demand is expected across industrial markets in 2021, underpinned by the continued growth of e-commerce, which will bolster warehouse demand.

Colliers International’s latest Industrial Research and Forecast report found leasing demand for industrial property is expected to accelerate in 2021, as economic conditions pick up and businesses have more clarity around the impacts of COVID-19 on their operations.

“The early signs of market recovery are starting to appear – business and consumer sentiment has rebounded, the labour market looks to have stabilised and consumer consumption is improving,” said Malcom Tyson, Managing Director, Industrial at Colliers International.

“Online retail sales have grown by over 80% in the year to August 2020 which is the highest annual growth on record. This has translated into strong growth for warehouse demand as ‘pure-play’ online groups and retailers look to bolster their fulfilment capabilities.”

Malcom said looking ahead, online retail is expected to further increase in popularity as consumers embrace online shopping platforms.”

“We are forecasting online retail spend to total circa $58 billion by the end of 2022, which would translate into warehouse demand of around 2.7 million sqm between now and then from e-commerce alone, based on experience from the US.”

David Hall, National Director, Industrial at Colliers International said “The continued take up of e-commerce is underpinning the Australian industrial market and will continue to drive leasing demand in 2021.”

“Over 1 million sqm of space has been leased across the western Sydney industrial and logistics market in 2020 so far, and we anticipate this to increase next year.”

“Demand is expected to be led by pre-commitments as occupiers focus on improving efficiencies through automation and scale.; take-up activity in Sydney has been strongest within the Outer West submarket, buoyed by the 200,000 sqm Amazon pre-commitment within the Oakdale West Estate.”

“The growth of online retail continues to support leasing demand with several significant pre-lease deals being recorded in 2020 and we expect demand from these occupiers to gather pace,” Luke Crawford, Associate Director, Research at Colliers International said.

“More broadly, occupiers are taking longer to commit to new or expansionary space as they look to better understand the longer-term economic impacts on their business,

“Looking ahead, activity is expected to pick-up over the next six months with a sharp increase in tenant enquires being recorded over the past month.”

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