Goodman's investors continue to be the beneficiary of a good strategy employed consistently across the globe with shares hitting a new post GFC high of $15 this week.
A demand & supply imbalance across industrial markets (see chart below) continues to drive earnings for the group as Goodman's customers continue to demand close proximity to consumers in urban locations, driven by:
– Structural trends of urbanisation
– Rapidly changing purchasing behaviour of consumers
– Rising consumerism and the increasing need for convenience
Most industries, including e-commerce, traditional retail and 3PL’s are re-evaluating their supply chains which is resulting in demand for logistic assets outstripping supply in these urban locations.
Goodman continue to believe that location, location, location is the critical success factor in their ability to support their customers supply chains as they evolve over the next 5-10 years, providing resilient cash flows for the longer term and avoiding markets which could potentially be redundant in the future.
Site selection has become a intense process driven by a need to consider long-term changes in planning, infrastructure, remediation and redevelopment. It requires patient capital and with experienced teams pursuing incremental gains.
For Australia, Goodman sees a range of business drivers supporting their strategy ;
Business drivers; Consolidation and rationalisation:
- customers seeking efficiencies in their supply chain networks – relocating to M4, M7 infrastructure
- New e-commerce entrants and traditional retailers moving to online Rising consumerism and the increasing demand for convenience
- Demand from data centres and multi-storey fulfilment centres as customers require space in infill locations (Port Melbourne and South Sydney).
Strategy:
- Targeting major metropolitan cities on the east coast of Australia Focus on long-term sustainability of income
- Development of our greenfield / brownfield land continues to be the best risk adjusted method to access product in the right locations
- Growing number of opportunities to redevelop existing assets to more functional and intensive uses See their latest presentation for Goodman's strategies in other global cities
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