E-commerce in Australia is boosting the industrial real estate income trust (REIT) as customer demand for warehouses and industrial real estate continue to increase.
More and more logistics facilities are being established in major urban centres to provide same-day delivery turnaround times – a service desired by an increasing number of Australian online shoppers.
Massive warehouses and profits in the industrial real estate income trust
In Perth, Centuria Industrial REIT, who has a $1.1 billion portfolio, leased an 8,000 square-metre facility at Belmont for the courier arm of Toll Holdings, Toll Fast, to accommodate faster delivery times. The warehouse facility is efficiently placed between Perth CBD and Perth Airport.
They have also recently signed EWE Global Logistics for 15,000 square metres in Chullora, while Australia Post renewed their 5,000 square-metre lease with Centuria in Ingleburn.
One of their biggest tenants, AWH, formerly Australian Wool Handlers, operates around 600,000 square metres of space to try and provide the best supply chain solution for their clients’ needs.
The Amazon threat
Amazon’s presence is making traditional and new-age Australian retailers think about their supply chain.
Amazon currently occupies 70,000 square metres of warehouse space across two facilities in the country – one in Sydney’s Moorebank and another facility in Dandenong South in Melbourne.
With Amazon’s estimated global net worth of over $1 trillion USD, they could dominate the industrial space.
The future of physical stores
According to Vicinity Centres, which shopping malls include Chadstone in Melbourne and Sydney’s Chatswood Chase, e-commerce stores will still need physical stores. This is because the majority of the people buying online want to visit a physical store first.
Vicinity adds, “This recognises the need to be omnichannel, but (there is a) wide disparity in the retailers’ capacity to adapt.”
In line with this, they suggest physical stores should consider emphasising on food, leisure, and the entertainment experience to keep their customers from buying online.
The growth of e-commerce has definitely changed consumer behaviours. Businesses need to study their supply chain to keep up with customer demand and to facilitate last-mile delivery.
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