Shrinking Sydney drives changes in industrial warehousing developments

New vertical lift technology is enabling building up rather than out meaning that Sydney's record industrial site prices can be managed more cost effectively. 

Heightened industrial warehousing demand in the past 24 months has driven land values across Sydney to record high levels, according to new research from Savills Australia.

Industrial land values in South Sydney are now at their highest level on record, pushing the $2,000 per square metre mark, while industrial sites in Western Sydney are at more than $600 per square metre.

Sydney’s population increased by 100,000 people in the past year, with 85% made up of overseas migrants. 

Savills Australia’s associate director for capital strategy, Shrabastee Mallik says that the "record high levels of population growth are eating up available land for residential purposes with blocks of land within traditional industrial precincts being sold for residential redevelopment purposes".

"Manufacturing and logistics sector accounts for 10% of NSW’s Gross State Product and projections point to significant growth over the next 30 years,” she said.

“As such, stellar growth in land values in the South Sydney precinct is understandable, which include Port Botany and Port Kembla, with these jointly contributing $4 billion dollars to the state economy". 

She also pointed out “NSW Ports’ 30 Year Master Plan points to these two ports tripling the amount of container volumes processed over the next 30 years”.

New innovations in the form of vertical lift technology enables massive increases in efficiency by building up rather than building out utilising lifts reaching almost 10 metres, which has the effect of reducing warehouse size from 200 square metre to just 14 square metre. These types of technologies have the added advantage of requiring fewer workers, reducing operating costs.

Already, most new warehouse and supply chain environments are making use of such innovations, and the development of Moorebank Logistics Park, in its use of robotics and purpose-built facilities, has attracted significant interest across the warehousing and logistics sectors with Target Australia signing on as the first tenant at Moorebank, with a 10-year lease (plus options) for a new 37,860 square metre warehouse, due for completion in 2019.