Asian Property Review talks to Casey Robinson, Research Director of m3property, an Australian property valuation and consulting firm on what drives Australia’s logistics property sector.

What will drive demand for logistics property in Australia in 2019?

Demand for logistics property in Australia will continue to be driven by Australia’s growing e-commerce market and increasing global trade flows. At their core, these are being driven by population growth and consumption, as well as consumer expectations for delivery timing.

Driving demand for logistics property in certain locations will be investment in transport infrastructure projects by both the private and public sector. Major projects, including the AU$10 billion inland freight rail, are already driving demand for logistics property and distribution centres. In the case of the inland freight rail, demand is expected to strengthen for facilities proximate to the main terminals of the rail alignment. The consumer expectation of fast deliveries is also expected to drive increasing demand for last-mile facilities in inner and middle ring capital city locations.

Casey Robinson

What are the new technologies and strategies employed to enable such properties to make faster last-mile deliveries?

The speed of last mile deliveries is being aided by two key factors – location choice and investment in technology. Facilities that are in prime locations, such as in close proximity to major road networks as well as within densely populated areas, are better able to make faster last-mile deliveries than warehouses in locations that are not as well serviced by transport infrastructure. In terms of technology, automation and the use of robotics can make facilities operate more efficiently, thus speeding up the delivery process.

How do you balance the need to build highly specialised warehouses/logistics properties with the need to make it appealing or more tenantable for future tenants?

Property owners and valuers (such as m3property) will increasingly face the issue of whether new, highly specialised buildings are going to be too tenant-specific and therefore reduce future tenant appeal, speeding up the building’s obsolescence. Whilst some of the technology incorporated in buildings may be transferable from one tenant to the next, some may not, resulting in it having to be removed or altered before another tenant is able to lease the building and this carries with it a risk of increased capital expenditure.

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