Sydney logistics space drying up
720,000 sqm of additional Sydney logistics space will be needed just to meet soaring e-commerce sales, according to CBRE’s latest research.
CBRE’s new Sydney Industrial & Logistics Land Supply report forecasts that a lack of industrial land supply in the inner city coupled with rising e-commerce demand will drive a market step change.
Report author Sass J-Baleh, CBRE’s Australia head of Industrial & Logistics Research says prior to 2020, Australia’s retail inventory sales ratio had been trending down for 30 years, reflecting a ‘just in time’ model.
“Global supply chain disruptions have highlighted the need for retailers, particularly those using an online sales platform, to hold more inventory to minimise fulfillment delays, which is driving greater demand for Industrial & Logistics space,” Sass says.
“Rising inventory requirements due to the expansion of the e-commerce sector is a trend we have observed in the US since 2012, and we expect this to be replicated in Australia over the coming years.”
These rising requirements are driving capital and rental value growth in Sydney’s industrial sector, underpinned by the fact that just 5 per cent of industrial zoned land in Sydney is currently undeveloped and serviced – equating to just 605 hectares of potential supply.
“This lack of land availability is particularly evident in Sydney’s inner precincts, which are becoming ever more sought after as ‘last mile’ hubs as e-commerce penetration rates rise,” Sass adds.