Hot Topic: Warehouse Property Supply & Demand - where to for Retailers & eCommerce?
Any modern retail business knows that the Warehouse – whether it’s used as a fulfilment & distribution centre, logistics hub, showroom, or just good old fashioned inventory storage – is crucial in an online world.
There are big benefits to e-Commerce, and hybrid retailers with traditional bricks and mortar properties, in terms of cost and flexibility. That’s why Australia’s warehouse market is a hot topic.
- What makes the situation in Australia unique – in terms of property supply and financing?
- How can retail and eCommerce firms find warehouses to rent, secure early access, and negotiate a good lease deal?
- What can retailers do to optimize their warehouse & retail property setup?
1. Australia has one of the world’s lowest Industrial & Logistics property vacancy rates
After falling to 0.8% through the first half of 2022, Australia has smashed its own country records and currently has the lowest vacancy rate globally. Lower than Belgium, the UK and Hong Kong, competition for warehouse and other Industrial & Logistics property is fierce.
Sydney exemplifies this, with a vacancy of 0.3% that makes it the lowest of any major city around the globe, ahead of Los Angeles, Gothenburg, and Seoul.
Parts of Australia are an absolute hotbed for warehouse market crowding right now – especially in and around the major metros.
2. Long and delayed development lead times, and the cost of steel & concrete
While this problem has lessened after the worst of COVID-19’s supply chain disruptions, we are seeing how geopolitical conflict, climate change and associated fiscal instability has serious implications for the construction industry and Industrial & Logistics property pipelines. Logistics, gas, raw materials and economic contractions are all potential sources of supply problems.
3. Increasing interest rates are stifling new development
A tightening of borrowing amidst a supply crisis makes for a perfect storm. Since financing new developments is more difficult as the cost of debt rises, broad-based expansion of supply is unlikely. And where new leasing opportunities do arise, low stock levels and rising prices will make for tough tenant-side negotiations.
4. Low stock levels and cagey business confidence are tricky to navigate – but may present opportunities for retailers
Limited opportunities for lease transfer or new ownership mean professional advice to find, negotiate and manage warehouse and other Industrial & Logistics leases has never been more important. What’s more, gaps are opening up for tenants that can be exploited to win great incentives and rental terms. Knowing what is available where, and when deals are coming up, is crucial right now.
5. We do have market depth when it comes to E-commerce, Cold Storage, Manufacturing, Food Delivery & more
There are options, and the sophistication of the market in Australia can be leveraged to the benefit of tenants, provided the right relationships with agents, property owners and developers. A network of stakeholder partnerships, market intelligence and negotiating experience are key to retailers getting a good deal on their property rental.
To learn more about retail, industrial & warehouse property supply & demand, see Phil Reichelt talk with Culture Kings Founder & CEO Simon Beard and NORA ~ National Online Retailers Association Founder Paul Greenberg.
Access to the right warehouse site at the right price can be lifechanging for a retail business.
Tenant Leasing Group offers valuable connections and personal service to find & negotiate the best #warehouse, #eCommerce, #retail & #industrial #property leases for rent. From 1,000sqm prime retail to 5,000sqm+ warehouses, we have access to properties that meet your specific requirements.
Founder & Principal, Tenant Leasing Group (TLG)
Phil Reichelt is a property advisor & tenant representative with 25+ years experience in Australia and New Zealand.
He specialises in multi-site retail, mixed-use office & industrial, and warehouse leases of up to 5,000sqm.
Phil negotiates competitive rentals, incentives, and favourable lease terms for retailers, eCommerce, financial services, legal firms, and other commercial occupiers.