Australia, Companies, Features, Industrial Property, Logistics, Supply Chain, Warehouses

Reaching the skies with multi-storey warehousing

Multi-storey can only be on a site that’s more than two hectares and mostly suited to infill locations.

As Sydney continues to have the tightest industrial vacancy rates in the world, the harbour city has become home in the past 12 months to Australia’s first multi-storey warehouses. Colliers’ Michael Crombie and Trent Gallagher explain to MHD why these towering developments are the future.

While demand for industrial assets continues to surge and vacancy rates remain at an all-time low across Australia – particularly in the New South Wales capital of Sydney – developers and investors are turning to the not-so-new concept of multi-storey warehousing. 

Further to the high demand, lack of land, and being in infill markets such as South Sydney, Central West and Inner South West – which are close to Sydney CBD – Port Botany and the Airport are the main key drivers in the shift to multi-storey warehousing and why it’s working so well.  

Michael Crombie, Director in Charge and National Director, South Sydney, who’s been working at Colliers for the past 20 years, has been collaborating with fellow colleague Trent Gallagher, National Director, on this transformative trend, which is reshaping the South Sydney, Central West and Sydney South West markets. 

To date, both agents combined have sold north of $1 billion worth of land in these key infill markets for the purpose of multi-storey developing, with the first ever multi-storey estate having just reached practical completion at 45 Burrows Road, Alexandria (AXIS).


With record low vacancy rates in Sydney sitting at around 0.3 per cent, and huge demand from occupiers to be located close to Sydney CBD within infill markets, it’s allowing for this new asset class to be at the forefront. 

“Landowners try to maximise their underlying land value,” explains Trent. “The shift in focus occurred off the back of the huge shortage of industrial land within South Sydney as a result of rezoning to higher and better use, government infrastructure upgrades and unprecedented industrial demand off the back of COVID-19, which accelerated the e-commerce business ahead of its time within the Sydney market.” 

Companies such as Goodman, Charter Hall, Hale, Dexus, and Stockland all recognise the potential of multi-storey developments and have extensive experience dealing with landholdings in Asian countries like China, Japan and Singapore. 

“Goodman have delivered Australia’s first multi-storey development at 45 Burrows Road,” notes Michael. 

“Hale will deliver the second multi-storey development at 42-52 Raymond Avenue, Matraville and Charter Hall will then deliver 520 Gardens Road, Alexandria. All three sites are in the core South Sydney market. This expansion though isn’t confined to a single region; it’s permeating other key infill markets such as Inner South West Sydney, the central west corridor, and even the North Shore.”

Trent adds: “With gross rents being approximately 35 per cent to 45 per cent cheaper in Sydney’s Inner South West and Central West, precincts along the M5 and M4 Motorway have proven to be an attractive alternative while still offering great access to the CBD, Port Botany, and Sydney Airport through recent infrastructure upgrades in the South Sydney market such as the Westconnex, which has almost halved travel times from South Sydney to these precincts.” 


Sydney’s upgraded motorways, including the M4, M5 and M8 (Westconnex) have reduced travel times between key destinations, ranging from Sydney Airport to Port Botany and major industrial areas in Sydney Central West and Sydney South West.

“South West Sydney and the Central West has seen a substantial rise in industrial supply over the same period, enabling users to relocate to newer facilities, often at a significantly discounted rate compared to what they were paying in South Sydney,” says Trent. 

“Over the past five years, approximately 1,500,000 sqm of new stock has been added to the South West Sydney market, representing 40 per cent of Sydney’s total supply over the period.”

“When analysing the map, it’s evident that many of these initial multi-storey developments cluster around key interchanges in Alexandria and St Peters,” adds Michael. “Qantas sold a strategic parcel of land in the Mascot precinct. We sold it to LOGOS for $802 million.” 

LOGOS, with its offshore capital and experience, partnered with different stakeholders to leverage a higher height limit, reaching 44 metres compared to the typical 18 to 24 metres in the region. 

Builders are competing for positions, eager to establish themselves as specialists in multi-storey construction. Michael says occupiers seeking space above 3000 metres in South Sydney find themselves in a market with zero per cent vacancy. “Multi-storey developments allow investors to double their net lettable area, making it financially viable despite the initial costs.” 

“Although initial developments are evident within South Sydney, in recent years, the distinction between the South Sydney, South West industrial and Central West markets has become increasingly blurred, facilitated by significant infrastructure improvements and tenant migration, which has seen multi-storey warehousing becoming a lot more prevalent in the West,” adds Trent. 


Most typical single level industrial business parks have a site coverage of about 60 per cent. That gross floor area is underdelivering on capacity. Whereby a two storey multi-storey development will allow for an FSR in excess of 1:1, and if a builder were to go three to five stories, that FSR would continue to grow.

“Another of our deals was for the CAE flight training centre facility, which was a low-cost four storey multi-storey development,” says Michael. “As of today, there have been eight lease deals within the multi-storey development sector by which Colliers have transacted five of them.” 

In Sydney South, the existing industrial assets are generally of an older nature. The average ceiling height is six to seven metres. Many are in between 4.4 and 8.4 metres in height. Michael notes that for some owner-occupiers and investors, it’s a flight to quality while for others, it’s related to ESG requirements. Many are looking for 10,000 square metre or more facilities.  

“It’s important for investors to remember that multi-storey developments are simply two warehouses on top of each other instead of side by side,” explains Trent. “The ramps and the buildings are designed to maximise both speed and efficiency.

“The main difference is the ground floor tenancy will have more columns whereas level one doesn’t, but due to the size of the warehouses, the columns are spread out broadly to accommodate the racking systems, which are installed afterwards.

“Multi-storey is the future of warehousing and it’s here to stay because it maximises the land value and increases the income for potential owners. We’re going to see more of it.”


Multi-storey can only be on a site that’s more than two hectares. It has to be a sizable parcel of land to accommodate the ramping system. 

Michael and Trent have been doing multi-storey development schemes for the last 10 years except they were originally smaller boutique strata developments. The only difference now is that with a lack of land and strong demand for certain locations, interest has increased, and institutions are now building them on a much grander scale. 

“There are benefits other than scale,” says Michael. “If an owner-occupier wants a 30,000 square metre building near a port, we usually can’t accommodate that requirement because we don’t have a site of those kinds of proportions. This is where multi-storey allows you to have multiple floors to maximise your area, which improves the scaling.” 

Owner-occupiers are now asking: do I upgrade my facility or demolish it and rebuild multi-storey? Trent reveals that besides a business being able to double its net lettable area, it can also have a return on investment over a 10-year period. All they have to first deal with is the considerable cost of constructing the warehouse. 

“You’re doubling the building area whilst outgoing costs remain the same,” adds Michael. “It means your outgoings are halved. An occupier is looking at their net rent plus outgoings according to a gross rent. This means the lessor can charge a higher net rent and make multi-storey developments more cost effective.

“These buildings have different heights with some being a little lower on the ground, but you’ve got columns. For some companies, their businesses need to be on the ground floor, and it’s usually due to them having heavy products and some have fast-moving freight or even cold storage, so they need to be able to move product in and out quickly whereas others who want to utilise the racking capacity, they might choose to stay on level one.” 

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