Here’s why industrial occupiers are relocating
A Sydney-centric warehouse strategy is now being considered risky
Historically, many industrial tenants have sought a Sydney location as the centre of their national operations. The difference in occupancy costs between Sydney and Melbourne – the obvious alternative – has never been enough to sway tenants due to the additional transport costs. But things have changed. In 2023, warehouse occupancy costs in Sydney are 80% more than in Melbourne, and 55% more than in Brisbane. This differentiation is prompting tenants to relocate, or at least have serious conversations about it.
Source: JLL research
But the challenge with Sydney is not just cost. Infrastructure and planning issues are directly impacting the risk profile of new developments and therefore the guaranteed supply of new warehouses.
"While some occupiers are completely relocating, others are holding inventory for Victoria, Tasmania and South Australia in those respective states as a first step,” says Richard Phillips, head of JLL supply chain, ANZ, JLL. “While this creates the need for greater vigour around inventory management, it does reduce the distance for inventory to travel, as well as the cost base. This shift is happening increasingly as holding all inventory in NSW is now considered risky.”
