Step up in time

Multi-level strata ware­houses are set to emerge in Aus­tralia but high- den­sity in­dus­trial build­ings are still a few years away from be­ing built

Australian Transport News - - Contents - WORDS R UZA Z IVKUSIC-AFTASI

Multi-level strata ware­houses set to emerge in Aus­tralia

T here was a time when most ware­houses had two or more floors. Such build­ings can still be seen in ar­eas close to in­ner- city docks that have been pre­served.

The rea­son they were that way his­tor­i­cally is why they are mak­ing a reap­pear­ance — even threat­en­ing to pop up in Aus­tralia, usu­ally renowned for its wide-open spa­ces.

Ac­cord­ing to com­mer­cial agents Col­liers In­ter­na­tional, the scarcity of space and soar­ing land costs and rent has seen in­dus­trial prop­erty own­ers reach for the sky as they build multi-level ware­houses. Small dis­tri­bu­tion cen­tres are on the rise due to di­min­ish­ing land sup­ply, with multi-level in­dus­trial units go­ing up within Syd­ney’s Alexan­dria and Botany precincts to max­imise floor space ra­tios and mar­ket val­ues.

The devel­op­ment of medium- to high-den­sity in­dus­trial build­ings, as seen in Hong Kong and Sin­ga­pore, has not yet taken off in Aus­tralia but Col­liers In­ter­na­tional is con­fi­dent that it will within a few years.

Man­ag­ing di­rec­tor for in­dus­trial prop­erty Mal­colm Tyson be­lieves that, although no trans­port op­er­a­tors have ex­pressed in­ter­est in the build­ing of multi-level ware­houses, the in­dus­try is keep­ing an eye on the con­cept.

“I think peo­ple are look­ing at it now, they need to find the right site and they need to make sure they’re com­fort­able and that the mar­ket will pay for it be­cause it will be more ex­pen­sive,” Tyson says.

“I think you might see some­thing in the next 18 months to two years and it’s only go­ing to be mar­kets that are un­der land con­straint.”

Strata units are not new in Syd­ney but have re-emerged re­cently due to a lack of avail­able zoned land, he adds.

“At the mo­ment there are no ex­ist­ing or un­der-con­struc­tion multi-level ware­houses in Aus­tralia, how­ever multi-level in­dus­trial has ex­isted for quite some time – they’re typ­i­cally smaller ten­ancy sizes.

“The South Syd­ney mar­ket has a di­min­ish­ing land sup­ply and, as prop­er­ties turn over into res­i­den­tial,

“If you need to be there, due to the con­nec­tiv­ity to sea port and the air­port, you pay a pre­mium”

with that comes more cars that size down heavy ve­hi­cles be­cause of the in­creased traf­fic and a di­min­ish­ing land sup­ply.

“So, there­fore, if you don’t need to be in South Syd­ney, you’re prob­a­bly quite happy to move out any­way.

“But if you do need to be there, and due to the con­nec­tiv­ity to sea port and the air­port, then you pay a pre­mium.”


In the third and fi­nal com­po­nent of Col­liers In­ter­na­tional Spot­light on South Syd­ney re­search se­ries, by Sass J- Baleh, it says the di­min­ish­ing in­dus­trial land sup­ply, cou­pled with soar­ing land val­ues and rents, has re­sulted in a strong take up of smaller in­dus­trial units that en­com­pass co-lo­cated and an­cil­lary of­fice space. Those build­ings

are more prom­i­nent in the South Syd­ney mar­ket, with de­mand from a mix of users, and in­creas­ingly from cre­ative users such as IT, me­dia and re­tail sec­tors that have re­lo­cated from Surry Hills, Pyr­mont and the CBD due to rental pre­mi­ums.

The re­port says that Hong Kong and Sin­ga­pore demon­strate sim­i­lar at­tributes to that of Syd­ney’s south re­gion in terms of the air­port and port in­fra­struc­ture prox­im­i­ties, lack of land sup­ply and sur­round­ing densely pop­u­lated area. Un­like the Syd­ney metropoli­tan area, the Sin­ga­pore and Hong Kong mar­kets have no land avail­able to de­velop on and there­fore there is no al­ter­na­tive other than to build up and charge more for the user to oc­cupy the space.

The in­ner South Syd­ney mar­ket is sim­i­lar in that there is an ex­tremely lim­ited sup­ply of de­vel­opable land and there­fore there are greater pres­sures to de­velop multi-level rather than sin­gle ware­houses, the re­port finds. Plan­ning for higher floor space ra­tios and eco­nomic fea­si­bil­ity, such as con­struc­tion costs ver­sus rent/sale re­turns, needs to be con­sid­ered to achieve a

higher-den­sity in­dus­trial devel­op­ment in to­day’s mar­ket, J- Baleh notes.

“I do not think we will see high-den­sity in­dus­trial build­ing de­vel­op­ments like those 15- to 30-storey ones in Hong Kong and Sin­ga­pore be­ing ap­proved or de­vel­oped in Syd­ney,” she says.

“I be­lieve what we may see emerge over the next few years are po­ten­tially multi-storey de­vel­op­ments above two-storey, how­ever, be­low five-storey in South Syd­ney due to strict land zon­ing con­trols and air­port/ flight paths. There is a per­cep­tion that multi-storey build­ings means high-rises, how­ever, this refers to any­thing above one storey.

“I also think it is worth men­tion­ing that the devel­op­ment of Moore­bank In­ter­modal Ter­mi­nal and the rail­way line con­nect­ing Port Botany to Moore­bank will cer­tainly al­le­vi­ate ca­pac­ity con­straints in that there will be less re­quire­ment for cer­tain fa­cil­ity op­er­a­tors to be lo­cated di­rectly next to the port for ac­cess to con­tainer flow,” she adds. “This there­fore may to an ex­tent re­duce the need for in­dus­trial space to go up by more than a few storeys.”


The lo­gis­tics in­dus­try typ­i­cally op­er­ates be­tween 2,000 to 10,000 square me­tres, with a lot of prod­uct com­ing in and out. Strata units, on the other hand, are a frac­tion of the size – typ­i­cally up to 300 square me­tres.

“Strata ware­houses have been around for 30 years and there’s al­ways a new one com­ing out of the ground at any point,” Tyson says. “The price point is maybe a mil­lion dol­lars, whereas the multi-level ware­hous­ing fa­cil­i­ties could be be­tween $15-$60 mil­lion.”

Mel­bourne has got no strata sheds due to the work­ing trans­port net­work and land avail­abil­ity, he adds.

“It’s hard to iden­tify a lo­ca­tion, prime rea­son be­cause you’ve got a very good trans­port net­work there,” Tyson says. “If it was to be lo­cated any­where it’d be in Port Mel­bourne or city fringe but the in­fra­struc­ture is good enough al­ready.”

He be­lieves Syd­ney is most likely to see the first multi-storey ware­house.

“I just look at land val­ues – to make it vi­able for in­dus­trial zon­ing you must go mul­ti­ple lev­els for the amount of money you’re pay­ing per square me­tre of land,” Tyson says. “That’s why it’s not be­ing built to­day – be­cause it’s not mak­ing it fi­nan­cially fea­si­ble.

“The re­sults of our re­search shows us that the prod­uct will come, it’s not here to­day and it’s driven by a re­duc­tion of avail­able in­dus­trial land, which is forc­ing up rates. So there­fore you need to put up more build­ing on a site to make it vi­able and then you need to take into con­sid­er­a­tion in­creased build­ing and con­struc­tion costs, and the premises oc­cu­piers will get will have some con­straints within it – at the mo­ment a lot of con­struc­tion fa­cil­i­ties are free stand and what it will of­fer is prox­im­ity.”


With up to 20 years of in­dus­trial land avail­able to be de­vel­oped in Syd­ney, there is a lim­ited amount of land to deal with, Tyson says.

“When we do our anal­y­sis we can see some­where be­tween 15 and 20 years of in­dus­trial land avail­able to be de­vel­oped in Syd­ney and that’s not long when you con­sider a new build lease is 10 years, so there’s a lim­ited amount of land to deal with and we can see an end to that avail­abil­ity,” he says.

“In Mel­bourne it’s slightly dif­fer­ent, there are plan­ning con­straints and con­trols of the amount of land. Right now the land mar­ket is fairly tight in Mel­bourne.”

“What we may see emerge over the next few years are po­ten­tially multi-storey de­vel­op­ments above two-storey...”

Above: How multi-level ware­houses used to be, such as this one in Lon­don’s Dock­lands Op­po­site: Col­liers In­ter­na­tional man­ager for in­dus­trial re­search Sass J-Baleh

Above: The pres­sure to go up is on in Syd­ney

Left: Col­liers In­ter­na­tional man­ag­ing di­rec­tor for in­dus­trial prop­erty Mal­colm Tyson

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.