Multi-story warehouses coming to Sydney by 2020: CBRE
With land prices soaring and development sites close to the major cities in short supply, multi-storey warehouses could make their appearance in Australia as early as next year, according to a new report by CBRE.
Titled On The Up and Up, it forecasts the first such developments – already common in places like Hong Kong and Singapore -to become feasible in land-constrained Australian markets like South Sydney by 2020 and inner Melbourne by 2023.
CBRE’s head of retail and logistics research, Kate Bailey, said occupiers’ willingness to pay more for prime locations would be the catalyst for multi-level warehousing coming to the East Coast sooner than currently projected.
This, she said, would particularly be the case in high-growth markets like South Sydney and inner Melbourne where land values have soared 67 per cent and 91 per cent respectively in the past five years.
“With growth well above rental values, developer margins have eroded – driving developer interest in multi-storey warehousing,” Ms Bailey said.
Industry sources confirmed preliminary discussions around sites in Sydney and Melbourne for multi-storey projects were already underway.
Major industry figures like Greg Goodman whose Goodman Group has developed multi-level warehouses in places like China, said last year these projects would come to markets like South Sydney driven by the growth of ecommerce and the need to be able to deliver goods bought online to buyers in the major urban areas within a few hours.
In such areas, industrial rents have surged past $200 a square metre compared with an average of about $120 per sqm as more older-style facilities are converted to apartments and data centres.
“Scarcity of sites in infill areas and growing competition from other uses is driving intensification of existing properties into multi-storey and higher value assets. This continues to be a theme across our portfolio,” Mr Goodman said.
Many Asian cities where available land is limited and site costs are high – such as Tokyo, Hong Kong and Singapore – already have established
multistorey warehouse networks, the CBRE report said.
“Generally, the higher the underlying land value, the taller the warehouses,” said CBRE.
“For example, land values in Hong Kong average over $US2,600 ($3674) per square metre and developments average 12 floors, while land values in Tier One cities in China average $US161 per square metre and developments average two floors
“Additionally, rents in multi-storey warehouses in these high cost cities are often up to 20 – 30 per cent lower, resulting in a considerable saving
in occupancy cost.
However, construction costs are significantly higher.
The CBRE report quotes Rawlinsons Australian Construction Handbook as saying the average cost to construct a multistorey warehouse of up to six levels is approximately 79 per cent higher per square metre of building area than for an average single-storey, high-bay, precast wall structure in Melbourne.
