Costco leads warehouse building bonanza near Sydney's second airport at Badgerys Creek

The outer-western Sydney region is set to be the home of $352.5 million worth of warehouses, figures from the Australian Bureau of Statistics showed. That makes it the top area in the country for warehouse building approvals in the first half of 2017.

It easily beat the $94.7 million of proposals in the next biggest hotspot, Rockbank and Mount Cottrell in Melbourne’s west.

Costco has submitted plans to build a 14.27ha warehouse in Sydney’s Eastern Creek.

One of the biggest warehouse plans submitted is Costco’s 14.27-hectare warehouse and distribution centre – the size of about 17 Olympic soccer fields – at Oakdale South Industrial Estate, in Sydney’s Eastern Creek.

It will become the distribution point for the mega retailer’s other warehouses and its online store when opens in early 2019.

The project is expected to create more than 900 jobs when construction begins.

A spokesperson for Goodman, which owns the development, said the industrial estate had benefited from recent significant infrastructure upgrades, connectivity to Sydney’s motorway network and access to the large labour force in the area.

“We’ve seen strong recent activity as customers continue to be attracted to the prime western Sydney location.”

Domain Group’s chief economist Andrew Wilson said the rise of online retail had paved the way for the warehouse building boom.

“There’s no doubt that online buying is becoming a more popular process for retailing and what that means is that we’re seeing more and more need for larger warehouses to store the products,” he said.

“There’s a significant, underlying change in industrial production – a disruptor in favour of online buying.”

Costco is set to launch online shopping in early 2019. Photo: Airview Group

Dr Wilson attributed the convergence of warehouse plans in the Horsley Park area to the region’s location close to Badgerys Creek Airport, which will be operational in 2026.

“What we’re seeing here is clearly in Sydney, there’s a gravitation towards Badgerys Creek,” he said.

“This shows the future, Badgerys Creek is the transport hub.

“What’s the point of having a warehouse if you’ve got to have a line of trucks travelling two hours from Sydney’s docks?”
Developers are “circling opportunities” close to the future Badgerys Creek Airport, CBRE’s Michael O’Neill says. Photo: Katherine Griffiths/Fairfax Media

But CBRE’s NSW senior director of industrial and logistics Michael O’Neill said as of now, the strong inquiries he was seeing for industrial land in the Horsley Park and Kemps Creek area was “somewhat irrespective of Badgerys Creek (Airport)”.

“Institutional developers are already circling opportunities surrounding Badgerys Creek and so are larger retailers,” he said.

“(But) we haven’t seen migration to Badgerys Creek yet as (the airport) is not established but we anticipate air freight users and airport industry-related users such as food exporters to be the first to gravitate there.

“Once established, the ‘aerotropolis’ will attract industries like defence and aerospace, advanced logistics and manufacturing.”

Mr O’Neill said that Sydney had been land-constrained, unlike Victoria which had a higher supply of industrial land.

Jennifer Williams, national director of research at M3 Property Strategists, noted access to the major motorways was driving demand in western Sydney.

“The types of tenants expanding, largely retailers looking for storage and distribution space, require larger space than often available in inner precincts,” she said.

“(They) require access to the motorways for efficient distribution of their products to the stores or customers.”