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Value of inner city logistics hubs to soar as e-commerce grows: CBRE

Sydney alone will need to increase its overall logistics footprint by at least 720,000 sqm over the next four years in order to keep up with the rising relevance of online shopping, according to a new report from property firm CBRE.

The business’ Sydney Industry and Logistics Land Supply report forecasted that a lack of industrial space in the inner city, coupled with increasing e-commerce use, will drive a major change to how retailers operate logistically.

“Prior to 2020, Australia’s retail inventory sales ratio had been trending down for 30 years, reflecting a ‘just in time’ model,” said report author and head of industrial and logistics research Sass J-Baleh.

“Global supply chain disruptions have highlighted the need for retailers, particularly those using an online sales platform, to hold more inventory to minimise fulfillment delays which is driving greater demand for industrial and logistics space.”

However, according to CBRE, only 5 per cent of current industrial zoned land in Sydney is undeveloped and serviced – leaving 605ha of potential supply – which is largely found in the outer south west of the city.

What this means is that, given the city’s limited development pipeline, existing industrial-zoned land in inner city areas will see a jump in value appreciation as they continue to be the most sought after areas for ‘last mile’ hubs.

“Over the next 18 months we forecast further limits to the availability of undeveloped and serviced land in Western Sydney, with no availability expected in Sydney’s inner precincts over the medium term,” J-Baleh said.

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