Online retail is having a healthy impact on the industrial sector, according to reports from CBRE and Jones Lang LaSalle.
Jones Lang LaSalle’s report Online Retailing: Driving a new wave of Industrial business says ‘etailing’ is growing rapidly due to a strong Australian dollar and increasing foreign etailer activity in Australia.
A report by Urbis forecast annual growth in online sales of 16 percent between 2010 and 2020, which would see online sales reach a total of 11.8 percent of total retail spending in 2020.
CBRE’s How Global is the Business of Retail? report finds one of the key challenges facing online and cross-border retailers remains the effective storage and distribution of goods bought online.
CBRE also says an increasing number of local and international retailers are adopting multi-channel retailing strategies, which in turn has led to a greater storage and transportation requirement.
Andrew Maher, JLL NSW head of industrial, says robust growth in online retailing is having a positive impact on demand for industrial property.
“We have seen a marked increase in enquiries from etailing companies looking to expand their warehousing capacity as they position for future growth,” Maher says.
Michael O’Neill, CBRE industrial and logistics services associate director, says his team had fielded enquires from a number of tenants related to online retailing.
“The proportion of retailers that can deliver goods bought online to Australia rose from 19 percent to 26 percent over the last year. This trend towards online retailing has resulted in a number of businesses increasing their storage requirements,” O’Neill says.
Maher says etailers have a unique set of requirements when looking for industrial property: workforce quality and density, location, supply chain execution and real estate functionality.
“Etailers have unique requirements and these have to be reflected in the industrial properties they occupy. To start with, etailers rely heavily on staff who receive, pick and pack their products. A typical distribution centre of an online retailer can employ 300 people or more so they need a large floorplate and employee amenities,” Maher says.
“Location is another key factor for etailers. They need to locate in areas that provide fast and efficient movement of goods to their key concentrated markets, as well as proximity to major postal mailing centres.”
“It is also important to remember that, unlike most industrial tenants, etailers are dispatching a high volume of small orders which is very different to shifting pallets of goods from large warehouses to store shelves. This means that etailers are able to occupy warehouses with lower clearance heights, which a few years ago were obsolete.”
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