Transport and logistics has become the stand-out star of the industrial market, underpinned by a rise in online shopping and shifting retail habits, Colliers International director industrial Raj Singh said.
The strength of the sector was demonstrated by the $1 billion purchase of 26 warehouses by Singapore-listed Ascendas, in a sale hotly contested by local and international buyers. The portfolio holds more than 630,000sqm of logistics, including a warehouse in Canning Vale occupied by Wesfarmers subsidiary Blackwoods.
Mr Singh said the WA industrial sector was seeing increased demand for sites suitable for transport and logistics, despite moderation in the mining services sector, while other traditional uses such as warehousing and manufacturing were becoming less dominant in the industrial mix.
“The loss of local manufacturing and rise in online shopping have combined to shift the demand drivers for industrial property,” he said.
“Transport and logistics has emerged as having the big demand on industrial space, driven by the need to ship retail goods to shop fronts or direct to consumers.
“At the same time, demands for showroom space and manufacturing warehousing have retreated.”
The interest in transport and logistics extends beyond existing sites to the development of new projects, as retail majors streamline their delivery direct to door or direct to store.
Distribution centres under construction include Aldi Australia’s 50,000sqm warehouse and distribution centre and the $35 million Kmart distribution facility, both being built in Jandakot, while Reece Plumbing has committed to a 15-year lease for 25,000sqm in the emerging industrial area.
Toll Express last month completed a $20 million renovation of its Perth Airport depot and the Reject Shop’s $12 million distribution centre was recently completed in Hazelmere.
Mr Singh said demand for access to transport routes would continue to spur investor interest and meant future supply would be needed at industrial areas linked to transport routes, such as Latitude 32, part of Western Trade Coast.
“The big issue now is land cost,” Mr Singh said.
“Despite the mining downturn, Perth industrial land values remain the second-highest in the country and land is about 30 per cent more expensive than land in Melbourne.”
Mr Singh and Colliers International industrial executive Jeremy Parasiliti recently sold a warehouse site in Malaga to a local investor for $2.7 million, which had potential as a transport-logistics site.
The sale of 329 Victoria Road represented a 6.7 per cent yield.