15 May 2019

Our growing expectations for fast delivery are transforming not only the retail experience, but the industrial & logistics landscape – the backbone of a behemoth ecommerce industry. 

To provide a seamless and high-speed shopping experience for customers, the infrastructure and background systems need to be robust, flexible and ever-changing. And, location is imperative – with tenants increasingly prioritising their geographic position over rent. 

Occupancy spend is just 5% of total supply chain costs – while, by comparison, transport expenses account for 50% of supply chain costs, almost a third of which is in ‘the last mile’. Therefore, it’s easy to realise why being situated in a key network location that provides quick and cost-effective access to population centres, has the potential to deliver a competitive solution. 

Given that two million people live within a 30-minute radius of Sydney’s central west, this region is positioned to become NSW’s last mile logistics epicentre. Securing a footprint in this area maximises an occupier’s last mile footprint by positioning them closer to the end user. 

With the increasing demand for last mile logistics facilities placing pressure on both rents and occupancy levels in Sydney’s central western industrial estates, the development pipeline is expected to top 120,000sqm of new industrial stock across the region over the next 18 months. 

This includes new developments at Rydalmere, South Granville and Villawood, adding to more recent brownfield developments at Chullora and Enfield. These developments will be instrumental in easing the strain on the wider market, absorbing demand from a broad range of industries, including food users, courier companies, air freight specialist and online retailers. 

There’s no indication that the demand for modern, efficient and technology enable logistics infrastructure will taper off anytime soon. Key network locations that can serve the dense population areas will see increasing interest from occupiers who understand their networks, cost to serve and service delivery. This will increase the intensity of interest in a set pool of industrial sites in key locations. This points to the need for increased utilisation in these locations, which could come from multistorey logistics facilities. While not common in Australia yet, they are in other regions where demand for location exceeds availability.

The dynamics of today’s market place are pushing retailers, logistics providers and online dependent businesses to examine their networks to ensure their sites not only deliver on the volume handling requirements but also connect with their suppliers and customers at a cost-effective level. 

Customer requirements are not showing any signs of slowing down. For example, as a new benchmark, Amazon Prime (in the US) recently announced it is committing to one day delivery, cutting the previous two-day commitment in half.    

This is an exciting time in logistics and supply chain and for an industry that hasn’t always moved quickly – the future is quickly upon us.