Amazon creates property ripples
Watch out for shrinking amounts of warehouse space as Amazon’s Australasian arrival makes waves in the New Zealand retail market, real estate agents warn.
Bayleys industrial and logistics national director, Scott Campbell said the arrival of the e-commerce retail giant would accelerate a trend of shrinking warehouse space, especially in Auckland.
Amazon has opened its first Australian warehouse in Melbourne.
Campbell expects the arrival of Amazon to drive the redevelopment of inner-city brownfield sites into ‘‘last-mile’’ delivery centres.
New Zealand’s annual online retail spend is an estimated $4 billion, and although online shopping represents a relatively small proportion of overall retail spending it is growing at a faster rate than bricks and mortar retail.
Campbell said: ‘‘The growth in e-commerce has forced retailers to reassess their property needs’’.
‘‘To fulfil customers’ orders quickly, they need warehouses, with international studies showing that e-commerce businesses need three times as much warehouse space as traditional brickand-mortar retailers.’’
In 2016 industrial property made up 56 per cent of commercial property sales in Auckland.
‘‘E-commerce has the potential to turn industrial property into the hottest component of commercial property market,’’ Campbell said.
Amazon has not commented on whether it will establish a presence in New Zealand, but brokerage firm Forsyth Barr has advised its clients that New Zealand presents a logical extension to Amazon’s investment in the region.
For retailers, location is the key to success, Campbell said.
‘‘To stand out in a crowded market, retailers are competing aggressively on reducing delivery times, which is creating increased demand for last-mile logistic.’’
‘‘E-commerce fulfilment is in its infancy, really, and there are a lot of different strategies being employed.’’
One of the more popular approaches is the ‘hub and spoke’ system involving a main distribution centre sending goods out to smaller centres for last-mile delivery.
New Zealand retailers are already responding to the disruption in the industry.
The Warehouse Group recently partnered with New Zealand Post to trial a new shipping service for online shoppers, Shipmate, as part of its push to drive e-sales.
New Zealand Post’s network gives it significant last-mile delivery reach and it is talking to a wide range of companies about partnering opportunities. Already, it handles logistics for food delivery service My Food Bag.