A new study has revealed a ‘general optimism’ for growth despite challenges
Australian transport and logistics’ real estate sector is positioned for strong net growth in the next 12 months, a recent survey reveals.
The warehousing and distribution sector is most positive with 86 per cent of respondents expecting their business to be better off while 61 per cent of the transport sector had a positive financial outlook, CBRE’s inaugural survey reveals.
Meanwhile, the industrial and logistics occupiers are “generally optimistic” about the future, with 66 per cent expecting their business to be better off financially and 25 per cent expecting things to stay the same over the next 12 months.
When it came to e-commerce, one of the more surprising findings was that the impact was yet to be fully realised in the sector, with 42 per cent of respondents indicating that they had seen no change from the growth of e-commerce in the past five years, the report states.
The Australian Industrial and Logistics Occupier Survey aimed to gain a better understanding of decision-making drivers, occupier strategies and how changes in technology and automation are impacting real estate requirements.
CBRE senior research manager and report author Kate Bailey says the results reflected an engaged and optimistic industrial and logistics market.
However, the results could have been better if not for the sustained increases in road tolls, particularly in Melbourne, and the introduction of a container charges at ports, with additional charges impacting profit and cash flow, the survey indicates.
“Surveys of this kind have rarely been undertaken in the Australian industrial and logistics market, meaning there has been limited benchmarking of what drives occupiers’ decision making,” Bailey says.
“The results provide clarity around opportunities that exist to attract and retain tenants as well the tools investors can harness to futureproof industrial and logistics acquisitions.”
Warehousing
In relation to multi-storey warehousing, the survey found that while there was a high level of awareness from respondents (90 per cent) only 25 per cent of respondents would consider this style of asset.
The level of appeal was lower amongst manufacturers (20 per cent appeal; 17 per cent consideration) – possibly due to the high cost of specialised machinery and equipment.
Turning to site selection, the survey found that access to road networks, key transport infrastructure and skilled employees had the highest level of perceived importance when selecting an industrial or logistics property.
Relocation
When it came to relocation intentions, 80 per cent of all occupiers expecting to move had an optimistic business outlook.
Bailey says this had been consistent across states and occupier types suggesting that strong rent growth in markets such as Sydney had not impacted expectations (with 90 per cent of Sydney occupiers having a positive outlook).
Looking at the size of their next or ideal premises, approximately 50 per cent of occupiers said that, should they relocate, they would be looking to continue operating in a similar sized facility.
Manufacturers were the most likely to want a smaller occupancy, with 21 per cent preferring a smaller footprint.
Bailey says this was possibly reflective of the shift towards high tech manufacturing, which was less floor-space intensive.
Sustainability
CBRE senior MD industrial & logistics Matt Haddon says the survey had also highlighted key trends and attitudes in relation to sustainability, e-commerce new development practices such as multi-storey warehousing, and the drivers behind occupiers’ site selection criteria.
On sustainability front, owners were significantly more satisfied with sustainable practices in their assets, with 21 per cent reporting a satisfaction level of at least 9 out of 10.
Conversely, those who leased their buildings had poor levels of satisfaction with 0 per cent reporting a satisfaction level of 9 or more out of 10.
“It is likely that the drive to incorporate sustainable design elements in industrial and logistics assets will continue to be led by the owner-occupier sector, with this group most likely to amortise initial expenses such as solar panels and wind turbines and see the flow on benefits from sustainable demand first hand,” Haddon says.
Read the full report here.