Australia’s industrial and logistics occupiers are generally optimistic about the future and expect their businesses to be better off financially in the next 12 months according to an inaugural CBRE survey.
The Australian Industrial and Logistics Occupier Survey was undertaken to gain a better understanding of decision making drivers, occupier strategies and how changes in technology and automation are impacting real estate requirements.
CBRE Senior Research Manager and report author Kate Bailey said the results reflected an engaged and optimistic industrial and logistics market, with 66% of respondents expecting their business to be better off financially and 25% expecting things to stay the same over the next 12 months.
The retailing, warehousing and distribution sector were the most positive, with 86% of respondents expecting their business to be better off.
“Surveys of this kind have rarely been undertaken in the Australian industrial and logistics market, meaning there has been limited benchmarking of what drives occupiers’ decision making,” Ms Bailey said.
“The results provide clarity around opportunities that exist to attract and retain tenants as well the tools investors can harness to futureproof industrial and logistics acquisitions.”
When it came to relocation intentions, 80% of all occupiers expecting to move had an optimistic business outlook. Ms Bailey said this had been consistent across states and occupier types suggesting that strong rent growth in markets such as Sydney had not impacted expectations (with 90% of Sydney occupiers having a positive outlook).
Looking at the size of their next or ideal premises, approximately 50% of occupiers said that, should they relocate, they would be looking to continue operating in a similar sized facility.
Manufacturers were the most likely to want a smaller occupancy, with 21% preferring a smaller footprint. This was possibly reflective, Ms Bailey said, of the shift towards high tech manufacturing, which was less floorspace intensive.
CBRE Senior Managing Director, Industrial & Logistics, Matt Haddon, said the survey had also highlighted key trends and attitudes in relation to sustainability, e-commerce new development practices such as multi-storey warehousing, and the drivers behind occupiers’ site selection criteria.
On sustainability front, owners were significantly more satisfied with sustainable practices in their assets, with 21% reporting a satisfaction level of at least 9 out of 10.
Conversely, those who leased their buildings had poor levels of satisfaction with 0% reporting a satisfaction level of 9 or more out of 10.
“It is likely that the drive to incorporate sustainable design elements in industrial and logistics assets will continue to be led by the owner-occupier sector, with this group most likely to amortise initial expenses such as solar panels and wind turbines and see the flow on benefits from sustainable demand first hand,” Mr Haddon said.
When it came to e-commerce, one of the more surprising findings was that the impact was yet to be fully realised in the sector, with 42% of respondents indicating that they had seen no change from the growth of e-commerce in the past five years.
In relation to multi-storey warehousing, the survey found that while there was a high level of awareness from respondents (90%) only 25% of respondents would consider this style of asset.
The level of appeal was higher amongst retail / warehousing and wholesaling occupiers (50% appeal; 50% consideration) and lower amongst manufacturers (20% appeal; 17% consideration) – possibly due to the high cost of specialised machinery and equipment.
Turning to site selection, the survey found that access to road networks, key transport infrastructure and skilled employees had the highest level of perceived importance when selecting an industrial or logistics property.
However, Mr Haddon said a range of opportunities existed for landlords to improve tenant attraction and retention, including improving basic amenity around common and green spaces, access to food vendors and proximity to public transport.
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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.
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.
