Sydney could see first multistorey warehouse as early as 2020

Dean Blake

4th Apr 2019

Mutlistorey warehousing could be feasible in South Sydney as early as 2020, with inner Melbourne likely to see such development in 2023, a report by property firm CBRE has posited.

While multistorey warehouses have seen significant uptake in Asia, particularly in Singapore and Hong Kong, the concept has not made much headway in Australia due to the prevalence of cheap land to build on.

But with customer expectations around fast delivery making centrally-located storage and delivery solutions more important than ever, the concept of multistorey warehousing is fast becoming a reality.

The report, On the Up and Up: The Rise of Multistorey Warehousing in Australia, posits that developers would be better served to invest in increasing the productivity of existing warehouses in these central locations to keep up with the growing delivery industry, rather than purchasing and running multiple sites.

“We forecast an additional 350,000sqm of distribution space will be required annually in Australia to service growth in e-commerce, with South Sydney and inner Melbourne to be amongst the highest growing areas in the country,” CBRE’s head of retail and logistics research Kate Bailey said.

According to Bailey, industrial land values in these regions has grown significantly over the past five years – 90.9 per cent in Melbourne, and 67.3 per cent in South Sydney.

CBRE’s Pacific director of supply chain advisory Christine Miller said that with the speed of delivery becoming crucial to a seamless omnichannel strategy, occupiers are concerned with securing locations close to their customer base.

“Tenants are increasingly prioritising location over rent… for an occupier to be in a key network location that provides quick and cost-effective access to population centres, this has the potential to deliver a really competitive solution for their supply chain,” Miller said.

TM Insight director of supply chain Adam Noakes said last year this would likely have the knock-on effect of increasing the value of such central warehouses, but that Australian developers may struggle to find local designers who have the knowledge to actually build multistorey warehouses.

Therefore, developers, designers and builders would need to collaborate with European and Asian counterparts which are well-experienced in creating multistorey warehouses.