Huge amount of warehouse space needed to fill demand

An additional 350,000 sqm of new warehouse space will be needed annually to keep up with the e-commerce boom, new research by CBRE finds.

The data, published in the 2021 Australia Real Estate Market Outlook Report, found that the demand for online retail had seen industrial and logistics enquiries for property skyrocket.

This is due to operations for online order fulfilment requiring three times the amount of space as a store fulfilment operation and significantly more inventory.

CBRE’s Pacific Industrial and Logistics Regional Director Cameron Grier said before COVID-19 occupiers were warehousing just enough stock to meet market supply at the time, which required a smaller footprint – but now, suppliers had moved to larger footprints to accommodate for the new wave of supply chain modelling.

“We are already seeing the average occupier warehouse footprint increasing to account for a wide-ranging rethink of inventory strategy, after many groups were caught with not enough stock during the pandemic,” he said.

This demand has resulted in unprecedented leasing levels similar to the residential market – especially across outer Western Sydney.

“I haven’t seen this level of leasing enquiry in nearly 20 years – almost every vacant building has two to three runners and intense demand for warehousing space, which has pushed core vacancy on the East Coast to 1.6 per cent and is expected to be sub -1 per cent in many key markets towards the end of the year,” Cameron said.

As well as traditional warehouse facilities, last mile hubs, repurposed retail facilities and parcel lockers will also be sought after property in the years ahead.

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