MHD PROPERTY FOCUS
SHORTAGES AND OPPORTUNITIES IN WESTERN SYDNEY Demand for industrial land is far outstripping supply in Western Sydney. David Hall, National Director – Department Head, Sydney West Industrial, and Jock Tyson, Executive | Industrial at Colliers, discuss trends, innovations, and prospects for the area as we head towards 2022.
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avid Hall, National Director – Department Head, Sydney West Industrial at Colliers, says that the Western Sydney land market is experiencing levels of demand well in excess of available supply. “Demand is at record highs, and will remain so for some time,” says David. “Looking at the market supply and demand for existing assets, the current amount of leasing demand in the market exceeds current supply by a factor of 3.6.” This is no coincidence, says David, as COVID-19 has been the catalyst placing significant pressure on the warehousing and distribution sector. “Tenant demand has continued to accelerate as occupiers take a deeper look into their supply chains in order to find further efficiencies and identify new opportunities – where locational efficiencies can improve their internal costs and delivery timeframes.”
Vacancy overview in Western Sydney. 46 | MHD NOVEMBER 2021
To illustrate this point, David draws attention to Australia Post’s recent activity in the area, having taken up three different short-term leases across Western Sydney to accommodate the increasing movement of online orders and supply chain pressures – all in the past three months.
BUILD TO CORE AND INNOVATION AGENDAS David says that large institutional developers, who are competing to grow funds under management in Western Sydney – where prime development opportunities of scale are increasingly scarce – have adopted a ‘build to core’ strategy: a long term-approach of developing and holding quality industrial assets within their portfolios. “It’s not only the security of returns that has reinforced this approach – due to record low vacancy rates of 0.4 per cent across Western Sydney [for
Mamre Road Precint ownership map. properties of 5000 sqm or more],” he says. “There is also the key advantage of facilitating and retaining prime leasing covenants within their portfolios.” So, what are the kinds of supply chain innovation agendas that companies are looking at in this industrial property context? David says that there is a broad, overarching reconsideration of supply chain management, as well as the unfolding role of automation. “The warehousing and distribution sector is constantly evolving as occupiers more frequently review their supply chain models and look to find efficiencies in their outbound logistics costs (movement of stock to store or direct to customer). In some instances this final stage of the supply chain can contribute up to 60 per cent of the total
