The unabated growth of online retail is driving major changes in the industrial and retail landscape, with the lines between the sectors becoming increasingly blurred amid supply chain fragmentation.
That was one of the key outtakes of CBRE’s annual Perth Market Outlook presentation, which highlighted the changing shape of both retail and industrial markets across the country, as the focus on convenience continues to strengthen.
CBRE’s Senior Director for Supply Chain Services Christine Miller said the drive for efficiency and extreme convenience in retail was shifting the goal posts.
“Previously, decisions were based around product and price, however, now we want everything customised and we want it today. It’s those preferences that are enabling automation to come into the supply chain, while at the same fragmenting it completely,” Ms Miller said.
“Traditionally, retail products have been housed in large warehouses and distribution centres, however, the focus on same-day/immediate delivery is seeing more companies fragment their locations closer to end users.”
Ms Miller said the mall experience was also expected to change dramatically in future years, as delivery services become increasingly sophisticated.
“Alibaba’s recent pursuit of a mall operator in China signals a major shift in the landscape of retail and how the lines between online, bricks and mortar and the industrial sector are being blurred,” Ms Miller explained.
“What this means is that you can go to a mall, make your purchases, have them delivered to your home right there and then, and then go on to enjoy all the amenities the mall has to offer without having to worry about carrying around all your packages.”
CBRE’s Director of Retail in Perth, Richard Cash, said it was imperative retailers embraced online if they were to remain competitive.
“The internet has enabled customers to become more informed than ever. They now research the products online, visit a store to touch and try the product and then make the purchase at home,” Mr Cash said.
Speaking about investment in Western Australia, CBRE’s Head of Research for Australia, Stephen McNabb, said Perth was an attractive destination for those with a five-year investment horizon.
“For every year we spend above trend, the cycle tells us we spend one year below trend. After five years above trend, Perth is now in its fourth year below trend,” Mr McNabb explained.
“Capital injection in Perth is expected to increase over the next five years as yield compression reaches its peak in Sydney and Melbourne, and investors now focus more on relative income yield as the main motivation for investment.”
The presentation also referenced CBRE’s latest Investors Intentions Survey – highlighting 30% of Asian investors list Australia as their preferred APAC destination for investment.
“Investors are looking for higher yield spreads which will push them to new locations - markets like Perth will come into the radar,” Mr McNabb said.
“The time to buy in Perth is 2018 – particularly given the yield spread over bonds in prime assets is nearly 400bp, almost 200bp wider than Sydney.”
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.