With online retail growing in popularity, demand for industrial real estate space is ramping up as e-retailers look to grow their logistical operations, with e-retail demand expected to require 3.2 million square metres of warehouse and distribution space by 2020.
Recent research by Commercial Real Estate Services (CBRE) identifies e-retailers as the future primary driving force behind industrial property demand.
According to CBRE, online retailers will steadily increase investment in their on-the-ground logistical operations to keep-up with rising demand across Australia, which will consequently send industrial property demand sky-rocketing. CBRE estimate these retailers will account for 90% of all industrial space needed into the future.
Once Australia’s car manufacturing industry ceases production in 2017, the abandoned sites of Ford, Holden & Toyota would provide about 3.6 million square metres of space which could serve as the perfect home for these new e-retailers.
Once these car manufacturers are gone, 3.6 square metres of space will be freed-up for use.
But, as research analyst Alexander Tan points out, with digital technologies and innovation changing consumer purchasing methods and influencing purchasing habits globally, innovation cannot be halted.
"We expect that Australian online retail trade is likely to catch up to the US and UK over the coming years,” predicts Mr Tan.
David Jones for example, wishes to grow its online retail sharply, with sights set on its e-retail accounting for 10% of all sales by 2018 and this is just one company amongst many Australian businesses looking into taking advantage of e-retailing opportunities.
Tan believes Australia ought to see transformative shifts into the future as the practice of e-retailing grows, with more and more third-party logistic providers and direct e-retailers seizing the innovative opportunities such a business model provides, thus driving demand for more physical real estate.
“E-commerce companies are still reluctant to commit to long term leases as they assess the future growth in this sector, however, this is likely to change in the medium term as the Australian market matures and more regulated growth is achieved,” stated Jason Edge, CBRE Industrial and Logistics Service Director.