CBRE predicts closed down car assembly plants will be replaced by logistical support operations for online retailing
The growing logistical operations of online retail in Australia are increasing demand for industrial real estate, with up to 3.2 million square metres of warehousing and distribution centres set to be required by 2020.
Commercial property agent CBRE says that significant uptick will help to balance out the expected reduction in demand from the closing automotive manufacturing sector.
“CBRE Research recently identified that 3.6 million sqm of industrial space would be vacated as a result of the closure of car manufacturing in Victoria and South Australia,” research analyst Alexander Tan says.
“Hence the forecast uplift in industrial demand over the next five years alone has the potential to offset most of the industrial space loss from car manufacturing.”
Australia is still playing ‘catch up’ with regards to online retailing, the research says.
Online channels account for 12.4 per cent of all UK retail sales, and seven per cent of all US retail sales.
In Australia, just 3.1 per cent of sales are currently made online, but Tan says this indicates just how far the practice is likely to grow in the next five years.
“We expect that Australian online retail trade is likely to catch up to the US and UK over the coming years,” he says.
The demand for physical real estate is expected to come from both third party logistics providers, and direct e-retailers themselves.
The entry of start-up retailers will mean demand for smaller, self-contained spaces.
“E-commerce companies are still reluctant to commit to long term leases as they assess the future growth in this sector,” CBRE Industrial and Logistics Service director Jason Edge says.
“However, this is likely to change in the medium term as the Australian market matures and more regulated growth is achieved.
“This presents an opportunity for landlords to position their industrial unit estates to cater to entrepreneurial online retailers with requirements for less than 1,000 square metres of space in more infill locations.”