Australia’s Booming Industrial Property Sector

While 2020 was certainly a tough year for the Australian property market as a whole, technically we’re already on the other side of the COVID recession. Jobs are rapidly returning, migration has been strengthening, and both vaccines are looking promising. The combination of all these positives are looking to start supercharging the commercial property market recovery as we head further into 2021.

In general, we’re not currently experiencing a shortage of money, despite last year’s massive rise in job vacancies. Which explains why online retail spending increased so dramatically over the last 12 months by almost $15 billion, which is well above the yearly average. It turns out that with all of us being stuck at home during the pandemic has only accelerated that growth. 

As the transition to shopping online continues, many retailers will be searching for faster ways to deliver their products more efficiently. This will most likely translate into an increased demand for real estate like large distribution centres over the next few years. Ultimately, this will see any under-utilised industrial spaces in urban areas sold and converted to handle their online order fulfilments. With investor interest in prime logistics assets still as high as ever, billions will likely be injected into development of these new giant warehouses.

According to research from JLL, for each $1 billion sold online, approximately 70,000 sqm will be needed in warehouse space. This is well over double the amount of warehouse space required for traditional retail sales. With new facilities required to meet space demands of e-commerce retail businesses, Australia’s industrial property sector is expected to be worth over $120 billion by 2025.

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