Speculative development activity is at 10-year high, according to Knight Frank’s Sydney Industrial Market Overview, Feb 2019.
More than 40 per cent of new completions in 2018 were speculatively built including Stockland’s Ingleburn Logistics Park (37,000 square metres) and Yennora Distribution Centre (21,000 square metres) and Mirvac’s Calibre Estate (20,000 square metres).
“Fast growth in e-commerce is playing a critical role in investment decision making, with the stream of new projects in 2018 elevating overall supply levels to a decade-high,” the report said.
“Despite a slow start to 2018, with only $467M transacting in the first six months, market turnover picked up significantly in the second half of 2018 with $1.12B of industrial assets transacting.
“This brought transaction volumes for the 2018 calendar year to $1.58B, a 33 per cent increase on 2017.”
The Outer West had been the most active with over 50 per cent, or $840M, in transactions in the region; more than double the $390M transacted in 2017.
The Inner West and South West accounted for 20 per cent and 17 per cent of transactions respectively.
Consumers demands for faster delivery time at minimised or no-delivery costs has driven increased pressure for last-mile logistic networks, according to Colliers International Industrial Investment Review
“Online retail sales growth has exceeded 35 per cent per annum over the past two years, according to ABS data, and the speed of penetration is expected to rise over the coming years as consumer preference continues to shift towards online shopping,” the review said.
Colliers believed the case for multi-storey warehousing in urban areas will strengthen over the next few years as it addresses both the scarcity and high cost of land”.
The agency noted the rise of “mini-warehouses” in the industrial market.
