Article | Adaptive Spaces

Why this Australian city is seeing a growth in multi-storey developments

Exploring the trending growth in Sydney’s multi-storey warehousing with insights from CBRE’s industry experts and Charter Hall.

November 21, 2023

The image shows an aerial view of an employee stocktaking in a warehouse.

The property squeeze across Australia’s major cities isn’t just confined to the residential sector. Off the back of ongoing supply challenges in the country’s Industrial & Logistics sector, CBRE is taking a closer look at why there’s a trending growth in Sydney’s multi-storey warehousing with insights from the industry experts.  

Charter Hall’s Development Manager, Jack Hansen, CBRE's Head of Industrial & Logistics Research, Sass J-Baleh, and CBRE's South Sydney Managing Director, Nathan Egan, provide their analysis as part of the latest Talking Property podcast episode

What’s happening with multi-storey 

According to the latest CBRE research, circa 850,000sqm in multi-storey warehouses will be developed in Sydney between now and 2027. The additional floorspace being erected into the sky will be delivered across 20 Sydney projects over this short period. It’s a trend which follows in the footsteps of other major Asian cities such as Tokyo, Hong Kong and Shanghai.  

What are multi-storey warehouses  

A multi-storey warehouse is a facility consisting of more than one level in order to increase the usable floor space per square metre of land. Being built vertically means that access is provided by a set of ramps, freight lifts, or conveyor system. As a result, each floor can operate as an independent warehouse used by multiple occupiers.  

“The upper floors also contain docks and doors and investors or developers will charge rent for each loadable square metre on each floor,” explains J-Baleh. “Multi-storey facilities are typically three to four levels. However, they can reach up to 17 storeys as seen in locations like Hong Kong, Shanghai, and Tokyo. Clearance heights can range between three and a half to 10 metres.”  

Why they’re being fast tracked 

Multi-level warehousing is predominantly driven by operational efficiencies and can be used by one occupier. The rent meanwhile is typically charged for lettable area on the ground floor. Historically developed within densely populated areas of Asia, these warehouses are now making a local impact here. 

“In recent years these types of warehouses have been appearing in Europe and the US and we are soon to witness multi-storey warehousing in Australia,” says J-Baleh. “We expect to see at least six multi-storey facilities being built in Sydney in just over the next two years.” 

From land shortage to location issues, there are important key drivers for multi-storey developments.  

CBRE’s latest reportCharter Hall has commenced construction on their first multi-level warehouse and office facility in South Sydney which on completion, will deliver 27,000 square metres of logistics space across two levels, alongside 5,000 square metres of A-grade office and wellbeing amenity. 

“From a fundamentals perspective, the proximity to arterial roads and the significant population within the surrounding area, occupiers can reach approximately 54% of Sydney's metropolitan population within 30 minutes,” explains Hansen.  

“When talking with tenant customers, one of the key pieces of feedback, particularly with Covid, was the inability to secure sites in this location to really meet that demand for fast-moving goods.” 

What are the opportunities 

Leasing-wise, Hansen says Charter Hall has been able to pre-commit 80% of the facility prior to construction.  

Beyond that positive sentiment, there are also intrinsic benefits in the building’s design.  

“The features that are included in these new multi-level warehouses are generally offering better operational efficiencies than the existing product,” says Egan.  

“That's everything from the extra number of roller doors that allow simultaneous loading and outbound delivery. The hard stand areas that these new multi-level developments offer are generally more generous in size than the existing availabilities within the South Sydney market. And a lot of the existing products don't offer awnings whereas multi-level developments have covered breezeways to allow all-weather loading for occupiers. 

“In some ways, the product is much more advanced than what the alternatives are in the South Sydney market.” 

The crucial considerations 

Construction costs play as the biggest inhibitor for multi-storey warehouses at the moment. Hansen says that construction methodology is important when considering multi-storey warehousing. From functionality to accessibility, other crucial considerations are also outlined in the latest Talking Property podcast episode.

 Get in touch with CBRE’s Industrial & Logisitics experts to learn more about opportunities in multi-storey warehousing.   

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