Stockland explains to MHD the booming industrial property sector, the resilient logistics industry, and the growing e-commerce trend – with expert insight from the company’s NSW Logistics Regional Manager and Head of Property Management, Robert Salerno.
Since March 2020, COVID-19 lockdowns have driven a boom in logistics, fuelled by the accelerated adoption of e-commerce. The industrial sector, including logistics, has proven more resilient to the impacts of COVID-19 than other property sectors.
This has made the need for resilient supply chain management, warehousing, and distribution more important than ever before.
Growth in online retail and changing customer expectations has created fundamental structural change in the demand for industrial land.
We estimate that for every $1 million increase in retail turnover, an additional 220 sqms of industrial property is demanded in Australian Eastern Seaboard capitals Deloitte 2020).
From 2020 through to 2030, e-commerce is expected to account for a third of additional industrial floorspace. This compares to just 15 per cent over the past decade (Deloitte 2020).
Our research on industrial tenant demand indicates staggering growth across Eastern Seaboard cities, set to incrementally increase 3.26 million sqms by 2030 (Deloitte 2020).
Although the clearest and most-powerful driver is the rapid uptake of e-commerce/online shopping, there are multiple other factors including the development of omni-channel retail and the evolution of supply chain strategies for sourcing and inventory locations.
Inventory stock levels are expected to rise as tenants seek to build greater resilience into their supply chains.
Longer-term influences include population and economic growth. Domestic GDP and population growth drives consumer and business expectations on spending, production, and inventory levels.
The federal government’s $1.5 billion in funding to support local manufacturing industries will further bolster industrial production and the need for logistics space (Source: AAP/Mick Tsikas).
International trade and port volumes also keep demand for logistics property high.
Being a net importer of goods and services, import growth in Australia is expected to return to pre-COVID-19 levels over the next decade, further contributing to continuing demand for industrial floorspace.
Stockland logistics expert insights with Robert Salerno
Stockland’s New South Wales Logistics Regional Manager and Head of Property Management, Robert Salerno, explains the market’s unprecedented buoyancy.
“Throughout my time in the industry, I’ve never seen the accelerated pace that we’re experiencing now and over the last two years,” Robert says. “It’s unprecedented and it appears permanent.”
“Ten years ago, logistics was nowhere near as popular,” he adds. “But now, we have tenants who really want to be in this space. Logistics is now institutionally accepted as being as valuable as an office tower.
“So, we at Stockland are building a logistics property pipeline in anticipation of future e-commerce demand. We are placing a lot of investment in the logistics sector to meet the market appetite. What we’ve seen is a massive growth in investment in the industrial sector as opposed to pure office space. A lot of logistics divestment in the marketplace.”
Robert says transport locations are essential to effective logistics locations. “We specialise in maximising logistics efficiencies and we’re at the forefront when it comes to our logistics portfolio.
“We offer our customers technologically advanced locations with excellent accessibility. This is the most important aspect. Consumers are hungry for goods and services to be delivered as quickly as possible. That places an emphasis on the importance of having well-located infrastructure.
“We are a leader in terms of strategically located logistics hubs. We have the right product in the right locations. And the good news is that we do have a healthy logistics pipeline that has a number of properties coming out of the ground.
“Going hand in hand with our investments, the federal government is investing large amounts of money to support manufacturing industries locally, which again results in the expansion of industrial production and logistics services.”
Stockland logistics tenants highly satisfied despite industry disruption
The logistics industry has been highly disrupted since the COVID-19 pandemic – and Stockland has been there to support businesses, as demonstrated by last year’s Tenant Satisfaction Survey.
The survey logged an impressive overall satisfaction score of 87 per cent for FY21 and demonstrates that our logistics customers rated us highly on all fronts (Stockland Annual Property Customer Survey for Workplace and Logistics, 2021).
Sturdy supply chains have become a key source of competitive advantage for operators in the e-commerce space.
Stockland has been able to offer flexibility and adaptability in the industrial space that businesses use.
Strategic location is also more important than ever before, with transport costs being around 40 to 50 per cent of an occupier’s cost base. This means that optimised distribution locations are crucial for businesses setting themselves up for delivering better propositions to consumers, such as faster last-mile delivery times.
We at Stockland understand these trends and challenges. We are addressing them through multiple ongoing measures and initiatives and gauging our customers’ feedback on our efforts to support their businesses.
This year’s survey has revealed a high degree of customer contentment across all areas of the business – including the properties themselves, business relationships and Stockland on-site staff relationships. We achieved an impressive overall satisfaction score of 87 per cent for FY21, comfortably surpassing our KPI target of 80 per cent (Stockland Annual Property Customer Survey for Workplace and Logistics, 2021).
At Stockland, we take a highly proactive approach to understanding our customers’ business needs, taking pride in our overarching ‘Space to Thrive’ ethos; giving our logistics partners not only the space they need, but the resources and advice they need to thrive.
Finally, with the country and globe in a state of constant environmental challenge and change, Stockland is committed to acting ethically. Sustainability is one of our core Strategic Pillars, and we are recognised as a sustainability global leader.
That’s the asset management style we pride ourselves on and the Tenant Satisfaction Survey confirms that a large percentage of our valued logistics tenant partners appreciate it.
For more information on Stockland, click here.