Across Asia, multistorey warehousing has been commonplace for a number of years due to land scarcity and the resultant high costs of land. Australia’s vast land availability has kept the cost of land subdued until recently, especially inner-city areas such as South Sydney and Inner Melbourne which boast good port accessibility and proximity to customer bases. Due to significant growth in online purchasing volumes as well as more demanding delivery expectations, an additional 350,000 square metres of distribution space will be required in Australia annually. These inner-city areas will be in high demand from occupiers willing to pay higher rents for optimal locations, with these rents offset by other savings such as cartage rates, toll and transport costs and various port charges.
Our analysis to ascertain the feasibility of multistorey developments in Australia found that based on the current cost of land, associated construction costs of the facilities and forecast growth in achievable rents, multistorey warehousing in South Sydney and Inner Melbourne will become feasible by 2020 and 2023 respectively. Considering the project lifecycle length from initial acquisition and planning stages through to completion, development is already underway.