Inner Sydney must embrace multi-level warehouses as online demands grows.
Multilevel warehousing will be needed in inner Sydney to meet warehousing requirements within the next five years, according to research completed by a supply chain consultancy.
TM Insight predicts Sydney will need at least 300,000 square metres of new warehousing space over the next five years – due to growing occupier demand and a booming ecommerce sector driving up warehousing needs near Port Botany and Sydney Airport.
TM Insight director of supply chain Adam Noakes says multilevel warehousing is the next step, and that the city will need to face up to the impact they will have on its already crowded industrial property market.
“Our industry, developers and planners must embrace this change and appropriately plan these buildings and surrounding areas,” Noakes says.
“Initially these multilevel warehouses in Sydney will most likely be purpose-built for single blue-chip companies, however as demand grows for these types of facilities it will lead to speculative builds for multi tenanted buildings.”
Preparing for these will mean developing access to the facilities – larger car parks and better public transport – as well as ensuring clear and simple truck access.
This will likely lead to another surge in values for inner city industrial properties, Noakes says, leading to higher direct transport costs and indirect costs, for things such as offsite truck parking.
“Third party logistics [3PL] companies such as Linfox and Toll will no longer have the luxury of using warehousing yards as free truck parks, forcing them to seek alternative yards typically placed in waste land nearby,” Noakes says.
“This then leads to value increases for waste land capable of being converted into truck parks.”
Noakes says that Australian warehouse designers will need to look to Europe and Asia to build experience in these developments – noting that multilevel warehousing is much more common there.
“In Asian multi tenanted multilevel buildings, truck access is strictly controlled by the landlord on a user pays system similar to a city car park,” he adds.
“Landlords charge trucks by the hour and this ensures that trucks do not sit idle and congest the limited dock and queuing areas.”
Occupiers will also have to become more efficient as warehouse space becomes more expensive – meaning they will have to sell more, with less inventory, and tightly control their inbound supply chain.
“This could lead to occupiers investing more in automation, as there are types of automation able to cater for occupiers with lower height tenancies of six metres typically found in multi-storey warehousing,” Noakes says.