Australia plays ‘Catch' up on e-commerce-led warehouse boom
The growth of online retailing, which accelerated during last year’s lockdown as people shopped from their living rooms, is expected to create demand for 490,000 square metres of new warehouse space – the equivalent of about 80 football pitches – per annum over the next couple of years, CBRE research shows.
Online sales, which as a proportion of total retail sales rose to 13 per cent from 9 per cent in 2020 are expected to rise to 20 per cent by 2025 and further rise as Australia plays catch-up with the rest of the world (the global average is 22 per cent) and the likes of the UK and China, whose e-commerce penetration is expected soar above 30 per cent in four years time.
This is based on CBRE’s Global E-commerce Drivers Index which forecasts a country’s future online retail take-up based on six key factors, including urbanisation trends, the proportion of online shopping done via smartphone, debit and credit card usage, the level of digital skills, the presence of a dominant e-commerce player, and the proportion of the population with a fixed broadband subscription.
“Although Australia ranks reasonably high in most of the six factors, the country scores relatively low in ‘mobile internet sales ratio’ (37 per cent) and weak in ‘dominant e-commerce player’ – particularly as Amazon’s impact in the Australian market has not yet matured,” said CBRE head of industrial and logistics research Sass J-Baleh.
“The stronger presence of an e-commerce player in the Australian market is expected to rapidly develop and this will further drive the e-commerce penetration rate over the next couple of years,” Ms J-Baleh said.
“Historically, an average of 1.4 million square metres of space has been delivered to the Australian market each year since 2010. Therefore, to cater for the growth in ecommerce, new supply will need to be elevated by approximately 35 per cent,” she added.
Demand for larger, automated distribution warehouses and last-mile fulfilment centres has already become a major theme in the market as major ecommerce players invest hundreds of millions in their supply chains including the likes of Amazon, Coles,Woolworths and online specialists like Temple & Webster.
Adding to this trend, Wesfarmers-owned online retailer Catch will open its first Sydney fulfilment centre in Qube’s Moorebank Logistics Park in the city’s southwest in 2022. ( The logistics park is due to be acquired later this year by Logos for $1.65 billion).
The new automated warehouse, Catch’s first outside Victoria, will be built on a 3.6 hectare site within the 243-hectare intermodal freight facility where Woolworths and Target are building new distribution centres.
Catch managing director Pete Sauerborn said the Sydney fulfilment centre would allow the group to serve customers more quickly and efficiently, particularly in NSW and Queensland.
“We are thrilled to be opening our first fulfilment centre in New South Wales, expanding our national footprint and helping our customers get the products they need when they need them, right across Australia,” Mr Sauerborn said.
Chris O’Brien, CBRE’s head of capital markets for industrial and logistics, said there was unprecedented demand for assets strategically positioned to accommodate fulfilment centres and last mile distribution hubs.
“On the back of the e-commerce growth story, we will see persistent increase in capital values, further yield compression, and rental growth,” he said.
“We are now seeing the emergence of sale and leaseback agreements within the e-commerce sector. A recent example was the sale and leaseback of VidaXL/HB Commerce site purchased for $137.1 million by GPT at an investment yield of 4.1 per cent.”
