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News release

AUSTRALIA

Industrial take-up on-track for record result, with e-commerce lifting demand

eCommerce is driving demand for industrial space, with the latest figures from JLL pointing towards take-up of Industrial space nationally being on track for a record result in 2017.


​​eCommerce is driving demand for industrial space, with the latest figures from JLL pointing towards take-up of Industrial space nationally being on track for a record result in 2017. Since 2015, the annual gross take-up recorded by the retail, wholesale and the transport, postal & warehousing sectors has been 54% above the 10-year average. Over the past 10 years, annual industrial take-up averaged 1,165,700 sqm. Over a million square metres of industrial leases were recorded in the first half of this year alone.

JLL's Head of Industrial Australia, Michael Fenton said, "We are seeing retailers increase investment into their supply chains and go through the process of evaluating their supply chain requirements. The requirements from fulfilment centres will evolve as retailers look to capture a greater volume of online sales.

"As margins continue to come under pressure from online sales and the entry of foreign players, retailers will look for ways to streamline their cost structures. This will involve the integration of their brick-and-mortar and online sales channels. From a logistics perspective, the key will be having well-located distribution centres to service their shops and customers directly. This is leading to a net increase in the demand for quality distribution space. 

"Retailers are aware of the consequences of not adapting quickly enough. The current competition for online sales will renew focus on delivery times and costs to the consumer. As such, retailers are now striving for more efficient logistics networks, involving a renewed focus on rebalancing their in-store and industrial requirements."

According to JLL Research, gross take-up continued at elevated levels in 2Q17. Total take-up activity in the year was led by Sydney (510,000 sqm) and Melbourne (377,237 sqm) markets. Brisbane showed a notable improvement in leasing demand with 219,731 sqm in leases taking place in 1H17.

JLL's Research Manager, Sas Liyanage said, "Despite the headwinds faced by the in-store retail sector, logistics requirements have continued to climb in recent years. The growth in online sales has transpired in industrial demand.

"Over the past 10 years, gross absorption from the retail, wholesale and the transport, postal & warehousing sectors would account for 56% of leasing activity. In 1H17, they have accounted for 72% percent of national take-up. We believe retailers will continue to invest in their e-fulfilment capacities to safeguard themselves against the threat from well-equipped international and online retailers."