IN THIS ISSUE OF INDUSTRIAL PROPERTY NEWS ISSUE 168 | APRIL 2024 | 02 9630 8000 | PAGE 2 We consider the possibility of further growth in industrial property prices for the year ahead. MARKET INSIGHT SPECIAL Industrial Property Values Set to Grow Further as e-Commerce Takes Off Bawdens is one of Sydney’s largest Asset Managers of SME (Small-to-Medium Enterprise) space for private clients. With over $3 billion in assets under management, we identified in part one of our e-Commerce survey, the reasons behind growth and success of lessees competing online (Refer to page 4). In part two, we identify how growth in the e-Commerce sector in Australia is likely to entrench owning a small industrial property as a key fundamental for investors and occupiers in the future. According to research conducted by Inside Retail on Australian Online Shopping, it has been revealed that over 1 million additional households are shopping online as compared to the year 2019. By 2033, it is expected that $1 out of every $3 will be spent online (a). Our SME tenants have recognised the growing desire from online shoppers to support businesses located closer to them. Social media platforms are sales channels in this area for SME’s. For example, Facebook and Instagram account users are recipients of digital ads making it a lot easier to find online stores, with 81% of online shoppers already using Facebook and Instagram to research products. Changing lifestyles will mean that last mile local fulfilment will have an increasing relevance to the consumers’ buying decision. The next 10 years will likely see a substantial demand for apartments as consumers continue to downsize, wanting a 24x7 delivery solution when they are not at home. Industrial property that will win in the years ahead will include proportionately large all-weather awnings, irrespective of the size of the warehouse to enable continuous fulfilment. For SME space, 9 metre clearance has become the new 7 metre minimum requirement, as material handling technology has enabled the use of larger volume metric space in smaller buildings. Less is more in office space as software technology platforms continue to centralise and outsource inventory and management functions, enabling fewer people to control more. Lastly, Sydney has a constrained supply of industrial land. The limited supply of land will see demolition of smaller, older, inner and central west buildings that reside on sites of 5,000m² or less. New facilities will be built to meet the needs from e-Commerce growth for last mile delivery to the increasing number of local online consumers, entrenching rental growth rates in various locations as replacement costs continue to increase over time. (a) Inside Australian Online Shopping L-R: Terry Saba and Robert Ally – Directors, Joumana Tarabay and Bechara Taoum - Associate Directors Asset Management
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