Combination of solid domestic growth, continued investment in the mining industry and strong demand from Asia, sees emergence of the transport and logistics sector as a major player in Perth’s industrial property market
October 12, 2010
A combination of solid domestic growth, continued investment in the mining industry and strong demand from Asia, has seen the emergence of the transport and logistics sector as a major player in Perth’s industrial property market.
According to property advisor Savills, the transport and logistics industry contributed a significant 17 percent of all industrial leasing activity in Perth for the year ending September 2010 and the sector’s demand for industrial space is forecast to continue growing.
WA Industrial Director James Condon says the recent growth of the transport and logistics industry in Perth has been built on its successful integration with the booming mining and resource sector.
“Given that the long-term outlook for WA’s resources industry is positive and will continue to be driven by industrialisation in emerging economies, particularly China, Perth’s transport and logistics industry should also benefit from this growth over the next decade,” he says.
“Currently, the majority of transport and logistics companies are located in the core industrial region of Perth, incorporating the suburbs of Canning Vale, Kewdale and Welshpool. The location is ideal for logistics companies given the close proximity to the Perth Airport and intermodal facility.
“The demand for space in this precinct has seen rents climb over the last decade and quality industrial space of 5,000sqm and above is currently difficult to source.
“Now is the perfect time to speculatively develop a project of 6,000sqm-8,000sqm. Perth lacks quality high-truss, insulated, sprinklered warehouses and this is just the type of stock which logistics companies cannot get a hold of and are actively seeking.”
Condon recently attended a major international logistics conference in Beijing, which showcased the global brands that manufacture and distribute out of China. He says the conference provided a valuable insight into the rapidly expanding nature of global logistics and transport and, in particularly, its close relationship with fast-growing industry sectors.
“I have also witnessed this trend emerging first hand here in Western Australia, where there has been a significant increase in inquiry for warehouse space from third-party providers that are tendering for work on the back of major new oil and gas projects, such as Gorgan. These providers are pitching for the storage and transporting of equipment from Perth to WA’s north-west,” he says.
“There are several examples of logistics companies that have, or are planning to, expand their current operations or take up new industrial space in Perth to service the WA resources sector.”
Toll has pre-committed to a 17,500sqm shed at Hazelmere, while TNT has pre-committed a 20,000sqm shed at Welshpool.
CTI Logistics has leased 7,500sqm of industrial accommodation in Bibra Lake, in addition to its recent purchase for $7.9 million of 79 Bushmead Road in Hazelemere, where it plans to build an industrial facility.
Ausdrill, involved in mining logistics, has also recently committed to a 7,000sqm facility in Canning Vale.
In other industry activity, Atco Structures & Logistics (ASL) has expanded its Australian operations through an agreement to acquire the assets of Arrow Holdings based in Perth.
Other key logistics players with links to the mining industry in Western Australia include Western Railroad, Simon National Carriers, Linfox and Seacorp Shipping Co.
Savills WA Head of Research Helen Swanson agrees that demand for Perth industrial space from the transport and logistics sector is likely to grow over the coming decade.
“The future looks bright for the Perth industrial sector,” she says.
“Whilst there is still some caution regarding the removal of government stimulus and the sustainability of the recovery, many analysts are predicting a return to trend growth for industrial product next year.
“Adding greater certainty is the fact that the federal election has now been decided and the mining tax has met the approval of large players such as BHP and Xstrata.
“With an estimated $200 billion worth of mining projects in the pipeline in Western Australia, and an already solid employment market, the demand for highly-skilled logistics companies will only continue to grow to support this growth.
“Consequently, we expect the logistics companies will be looking to expand or upgrade their current operations to meet this growing demand.”