If you are a growing online retailer, the decision to directly lease warehouse space instead of using a 3PL (third party logistics supplier) requires careful thought and planning. It’s time-consuming enough to manage the complex logistics of storage, packaging, inventory management, distribution and transportation without being a property expert as well.
This article focuses on leasing warehouse space in and around the Greater Sydney Region from a property perspective. Although aimed at online retailers, it’s useful for anyone leasing warehouse space for storage or distribution in Sydney. The article assumes a tenant is leasing the whole of a warehouse.
In early 2014 Colliers reported leasing in all sectors was expected to improve over 2014 with increased demand for business premises across office, retail and industrial and investment property. Highlights of the agency’s 2014 property outlook included:
Office leasing enquiries in Sydney increased by 54% in 2013.
Industrial leasing is being driven by logistic operators and developers are building large footprint warehouses on a speculative basis to accommodate them. Tenants of these warehouses can negotiate generous incentives. Supply of smaller properties (less than 5,000 sqm) is scarcer. SMSF’s are looking for well maintained assets with minimal, short-term capital expenditure.
In retail leasing, food retailing is supporting rental growth in shopping centres.
On the development front, conversions of commercial office buildings to apartments and hotels with a total of 102,121m² of office space earmarked for conversion to residential in Sydney.
Residential property prices increased 11.6% in 2013 and growth is expected to continue but not at such high levels.