It’s a sunny Sunday and you’re looking for somewhere to walk the dog, grab something to eat, maybe watch the sunset.
In Sydney, you might head to Norwest Business Park, which has 221 hectares dedicated to industry, 122 hectares of residential, and 30 hectares set aside for lakes, waterways and parks. Originally a farm, then a brickworks, its first occupants in the early 1990s included a church, now joined by a private hospital, shopping centres, and a train station.
While parks combining industrial and residential use are rare in Australia, those aiming for high environmental standards are becoming the norm.
Global Business Park, north of Perth, aims to be the first industrial strata complex in Western Australia to achieve a 5-star Green Star rating, while in Bundamba, south-west Brisbane, Centuria Capital Group has already tenanted its new 5-star Green Star distribution centre.
In Sydney, Frasers built Australia’s first 6-star Green Star industrial project at Horsley Park, and has another underway at The Yards.
Frasers chief executive Reini Otter says their leasing agreement with the Western Sydney Parklands Trust at Horsley Park was “pioneering”. The trust manages 5000 hectares of green belt in Sydney’s west and can commercialise 2 per cent of it to maintain the rest. Frasers won the tender to develop 20 hectares of park with its 6-star plans, which include zero-carbon power. “We wanted to trial energy resilience, not just green power, so we’ve put two backups in: 200kw battery storage to store solar power … and a biodiesel generator as backup.”
At The Yards, Frasers has partnered with non-profit foundation Heathy Heads in Trucks and Sheds to try and create a premium workspace, with healthy food options and outdoor exercise areas across the 70-hectare estate. “What we hope The Yards will do is set a new benchmark for industrial estates across the country,” Otter says. “We’re very focused on all aspects of ESG.”
“ESG is the next big thing,” said Murray Pettinger, director of JLL Industrial sales and leasing. ESG refers to Environmental, Social and Governance, the factors used to measure the sustainability and ethical impact of an investment.
“That is key to the future … developing business parks that are socially responsible and take into consideration environmental and waste factors.
“We’ve got clients who will look at ESG first and then the building’s fundamentals – occupiers will pay a premium for a building that is sustainable.”
There have also been changes in the way industrial parks are used.
Centuria head of industrial and CIP fund manager Jesse Curtis says: “The rise of e-commerce is one of the biggest trends globally, with a huge demand for warehousing as a result.”
Another trend Curtis noted was on-shoring manufacturing to Australia from overseas, to make supply chains more reliable. “In Australia, we’re heavily reliant on container transport and air freight so we had to invest in local manufacturing, mostly in production and assembly. For example, Fantastic Furniture used to import couches, but now they’re bringing them in as flat packs and doing more assembly here to use container space better.”
While larger manufacturers may prefer larger blocks of cheaper land away from the city, e-commerce and freight businesses need to be as central as possible. “Demand for space is insatiable … but the biggest demand is for urban infill,” Curtis says. “It’s all about being close to your customers.”
Inner-city rents are higher, but if transport is 50 to 60 per cent of a company’s costs and rent 5 to 10 per cent, it’s worth paying more rent to save on fuel.
“Take Milk Run, for example,” Pettinger says, referring to a startup company that promises grocery deliveries within 10 minutes. “They have lots of hubs all over the place where they keep everyday essentials; it’s focused on densely populated locations.” The company has about 20 bases in both Melbourne and Sydney, and riders deliver on electric bicycles.
Several plans were lodged in 2020 for multilevel warehouses in South Sydney, and in September 2021, Colliers announced Western Sydney’s first multistorey industrial park. Plans include B-Double truck access across two levels.
“Sites are also being bought along Sydney’s M5 corridor … and along the M4,” Colliers managing director industrial, Gavin Bishop, says. “In Melbourne, groups are considering sites in Port Melbourne.”
Bishop said that rents in multistorey units are similar to single-level ones, but outgoings such as land tax and council rates are lower, because they’re shared. Tenant demand and take-up have been good, he says, but there is still a “wait and see” attitude. “For warehouses, it’s predominantly the larger institutions who’ve had exposure to this in the Asian market – companies like LOGOS, Goodman and ESR who are getting involved.”