E-commerce demand for industrial space at 35 per cent: Mirvac
Online retailing is proving a major demand driver for logisitics space at diversified developer Mirvac, according to to its head of industrial Richard Seddon.
Mr Seddon said around 35 per cent of tenants secured at its recently completed Calibre Estate in Sydney’s Eastern Creek were e-commerce-related businesses with the take-up “in line with trends we are observing in the broader industrial market”.
“We’re seeing that the compression of consumer delivery-time expectations is driving demand for well-located logistics hubs,” Mr Seddon said.
Tenants secured to the five buildings developed on the 22-hectare estate include retailers Miele and Pet Circle, homeware products distributor Sheldon & Hammond and third-party ecommerce logistics specialist ACFS e-Solutions.
Mr Seddon noted that ecommerce was growing at about 35 per cent per annum in Australia as it catches up with the take-up of online retailing in places like the UK and USA.
“Online retail as a proportion of total retail in Australia is still low relative to global markets at 6 per cent.
“It’s 10 per cent in US, 18 per cent in Britain and the global average is 12 per cent,” he said, quoting JLL figures.
Recently, Goodman Group chief executive Greg Goodman said ecommerce made up a much as 60 per cent of the $44 billion industrial property giant’s occupier base, which includes the likes of Amazon, Walmart and DHL.
While industrial property makes up less than 10 per cent of Mirvac’s $11 billion investment portfolio, Mr Seddon said it was viewed within the group as an “important asset class” when you overlay structural thematic of e-commerce.
“We’re looking for new development opportunities which fit our mandate,” he said.
Mirvac’s latest completed industrial estate, Calibre at 60 Wallgrove Road, comprises 110,000 square metres of gross lettable space across five buildings with a combined book value of $125.4 million as of December 2018.
The estate has high sustainability credentials including energy efficient lighting, rainwater harvesting, solar, cyclist and end-of-trip facilities and 100 per cent natural lighting to reduce energy bills.
In August 2018, Mirvac sold a 50 per cent stake in the Calibre Estate to the Mirvac Industrial Logistics Partnership (MILP) a partnership between Mirvac and an investment vehicle sponsored by Morgan Stanley Real Estate Investing.
Mirvac’s entire logistics portfolio is valued at $868.7 million and is 100 per cent leased. Assets in the portfolio trade on cap rates of between 5 and 6.75 per cent.
