Port Activities
Australia’s major city population bases are heavily reliant
on imported goods for consumption. Growth in imported
consumption goods is a key driver of occupier demand for
industrial warehouse and distribution space.
The total value of goods imports (A$b current prices) have
increased 5.6% p.a. on average between 1995 and 2015
(Deloitte Access Economics). Further steady growth in goods
imports is expected to provide a solid base for growth in
demand for warehouse and logistics facilities. Goods imports
are forecast to increase 3.6% p.a. in the five years to 2020.
Infrastructure
In the 2015 Federal Budget the government made an
A$50 billion dollar commitment to improving road and rail
linkages in every state. Infrastructure will support Australia’s
economic growth in the near term and boost productivity
over the long term.
In 2015, work began on approximately 55 new major projects.
In New South Wales, some of the major infrastructure
projects the Commonwealth Government has committed
to include the Western Sydney Airport at Badgerys Creek
(A$2.9 billion over 10 years) and the WestConnex (A$1.5
billion). They have also committed to the Perth Freight Link
(A$866 million) and Gateway WA (A$675 million) in Western
Australia, whilst in Queensland the state government is
currently seeking A$558 million in Commonwealth funding
for the Ipswich Motorway Upgrade.
The impact of e-commerce and international retailers
Two more recent drivers of the industrial sector have been:
1) the rapid rise of e-commerce operators and growth in the
share of online retail sales and 2) the flow of international
retailers that have established new operations in Australia.
Both factors have been highly complementary to the
industrial sector.
The impact of online retail on the industrial property sector
is two-fold: 1) direct demand for warehouse and distribution
solutions from online retailers and domestic retailers with an
online platform; 2) demand for distribution space from third
party logistics providers for their parcel handling operations.
E-commerce penetration has reached a relatively mature
7%+ share of total retail spending, and growth has now
stabilised at a lower rate.
International retailers perhaps have the most direct impact
on the industrial occupier markets. International retailers
with large format stores have generally utilised third-party
logistics providers for their warehouse and distribution
functions. As international retailers roll out new stores across
Australia, new or extended contracts will be awarded to
third-party logistics providers (3PLs) resulting in greater
demand for industrial space.
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A-REIT ANNUAL REPORT
2015/2016
