Rise of online business giving industrial property a boost as Amazon eyes local market

Industrial property is on the rise as more online businesses start searching for massive properties to hold inventory, along with a general improvement in market conditions, experts say.

This comes as a new report suggests online book retailer Amazon is searching the east coast for a suitable warehouse that could serve as an Australian base – it comes after several other reports have indicated the retail giant is opening a local warehouse.

Ben Hegerty, an associate director of industrial property at Savills, told SmartCompany this morning he’s “definitely” seeing some improvement in the market connected to eCommerce.

“You look at the reports of Amazon, Catch of the Day doing a big deal last year, and there are others as well.”

Catch of the Day moved into a massive new property last year in Melbourne, as it quickly grew out of its previous warehouse.

Recent research suggests the industrial market is ticking up after a lean few years. According to the latest Melbourne analysis by Knight Frank, the amount of industrial space available for rent fell by 16% during the first quarter of the year.

Knight Frank said both prime and secondary buildings in “key locations” were leasing well.

Hegerty suggests at least some of the uptake has to do with the rise in the number of eCommerce stores searching for larger distribution centres.

“Even the cheaper importers such as Sonic, they’re in the market in a big way. It’s pretty simple, in that you have less manufacturing on shore. Goods have to come from somewhere to service a market, and they need to be stored.”

“We’ve seen that affect the market.”

Meanwhile, a new report suggests Amazon is taking more action to buy an Australian warehouse, with representatives travelling to the east coast to scout locations.

According to Fairfax, company officials will be visiting in the next few months to tour properties, or even sign up as a pre-committed tenant.

Amazon is one of the most popular online retail destinations for Australians, who browse to buy cheaper books, DVDs and other retail items. The company’s entry into Australia would allow it to operate a local warehouse, ensuring faster shipping times and lower costs.

It would also pose a threat to bricks and mortar business, as the company deals in a huge number of categories.

Hegerty says any move to Australia would “make sense”.

“They’re popular here… They could cut down on costs.”

This article originally appeared on SmartCompany.