Transport & logistics sector targets premium grade facilities in PerthDecember 19, 2014 / By
Transport and logistics firms have led the charge for the take up of industrial space in Perth in the last five years. Since 2010, approximately 34% of industrial take-up recorded by JLL has been for transport and logistics occupiers in Perth. In the last 12 months, Mainfreight, Recall, Toll, Kuehne and Nagel and Qube have leased industrial space in Perth, with the Perth Airport and surrounding core eastern suburbs being popular locations for logistics warehouses and distribution centres.
These firms, including third-party-logistics (3PL) providers, have been seen increasing their physical footprint in Perth in recent years, either through the design and construction of purpose built facilities, or expansion into quality, premium grade warehouses.
Given Perth’s remoteness and subsequent high transportation costs, the expansion and establishment of distribution centres in Western Australia (WA) is a step forward for many firms in order to service growing demand from the region. The rise of e-commerce, continued population growth, strength of the Australian dollar, and changes in consumer behaviour have led to increases in online shopping, import volumes and freight levels into Perth. Relative to the rest of Australia, Western Australians spend the highest proportion on online purchases. According to the NAB Online Retail Sales Index, Western Australians spent 16% above the national average. Regional WA has the highest average online spending, 26% above the national average.
This has increased the number of retailers outsourcing to 3PL providers or building their own warehouse and distribution centres in WA. By using a 3PL provider, retailers can focus on their core business, while outsourcing services such as warehousing, inventory management, packaging, transport and freight-forwarding. By outsourcing and/or holding stock in WA, online retailers are able to reduce delivery times and cost, and for the first time are able to offer next day delivery, and reduced delivery time to regional areas.
Whilst the current level of vacant industrial property in Perth is relatively high compared to the past 5 years, only a limited number of prime grade facilities are available that are suitably constructed to be considered by these types of occupiers. As well as being well located near main transport links, 3PL and logistics occupiers typically require warehouses greater than 5,000 sqm, high truss height and clearances, sprinkler systems, container height roller doors and loading docks, large hardstand areas and with suitable truck access. This makes the design and construct of a purpose built facility the preferred option for those without time constraints, particularly when requirements and configurations can vary depending on what type of stock is being warehoused. The majority of existing vacant industrial property in Perth doesn’t have the suitable truss height, ESFR Sprinkler requirements or floor space areas suitable for large scale pallet racking and automated systems necessary for logistics firms.
With solid growth forecasts for the level of international imports for WA, and online retailing showing no signs of slowing, transport and logistics firms look set to continue their growth in WA, and lead the way in the take up of prime grade industrial facilities in Perth.