Large industrial warehouse. Tall metal shelves filled with various boxes and containers.

Businesses seek to update their warehouses to accommodate new trends

Throughout 2022, COVID-19, the rise of e-commerce and urbanisation and other megatrends have created extraordinary challenges for industrial occupiers in Australia. But these recent events have also generated valuable opportunities for businesses looking to optimise their existing industrial space strategically.

Peter Evans, Colliers’ National Director of Industrial Advisory | Occupier Services, said enquiries have soared in 2022 as more businesses seek to update their industrial spaces and maximise their potential to adapt to the ever-changing industrial landscape.

β€œWith vacancy rates for industrial assets having plunged to a record low of 0.6% nationally over the next 12 months, the renewal rate is predicted to rocket to 95% as tenants continue to compete for space,” said Mr Evans.

β€œIndustrial will shift the focus to strategically optimise the existing industrial space, encompassing cost, location, design, operational and environmental considerations to maximise returns,” Mr Evans added.

In 2022, Colliers has transacted over 700,000 sqm of industrial space across the nation and has been approached by a high number of businesses seeking to optimise their current space to accommodate the new market needs, as it is becoming harder to move location due to lack of available stock.

β€œThe volume of requirements can be overwhelming, but it all comes down to aligning the client’s broader business needs with the property. Location, operational cost, logistics, meeting sustainability, building performance and productivity all play an indispensable role when it comes to right-sizing/sourcing the optimal solution,” said Glenn Maskell, National Director of Industrial Advisory | Occupier Services.

Through an industry-first collaboration with global management consultancy Argon & Co, Colliers is able to deliver a complete end-to-end supply chain and logistics solution for industrial occupiers.

Sean Mitchell, Associate Partner at Argon & Co Australia, said, β€œclients are increasingly looking for innovation within their current network to reduce logistics costs, carbon footprint and drive productivity to focus their requirements ahead of any major relocation.”

β€œUnderstanding and planning for a changing world is the challenge that has presented itself for many occupiers. With the recent technological and automation advancements, we’re able to utilise technologies, such as the Virtual Digital Twin model, to improve decision-making capability within a business through testing real-life scenarios,” Mr Mitchell added.

Morgan Evans, Head of Industrial Advisory NSW | Occupier Services, said the industrial sector is currently facing an undersupply of stock. Emphasising the revalidation of future space needs, ESG features and technology.

β€œMuch of the β€˜available’ space is still under construction with limited existing stock available, and as a result, leases are increasingly being negotiated 18-24 months in advance for existing space.”

β€œThere’s no one size fits all solution. To achieve flexibility in the industrial space, companies need to consider how their warehouse and technology can best support the future way of working,” Mr Evans concluded.

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