Multi-storey warehouse construction is expected to boom in Sydney’s land-constrained industrial market over the next five years, accounting for about 15 per cent of all new stock completed between now and 2027, according to a new report by CBRE.
A feature of land-constrained markets like Hong Kong and Tokyo, where some facilities can be as high as 17 levels, theThe emergence of the asset class has gathered momentum in the last few years following the surge in demand for last-mile fulfilment facilities close to major cities due to the growth of e-commerce and online shopping combined with surging land costs, record low vacancy rates and a spike in rents.
The cost of industrial land in Sydney has surged 67 per cent in the last 12 months to $2275 per sq m – more than double that of Melbourne – while Sydney’s average vacancy rate was just 0.2 per cent in the first of half of 2023, according to CBRE.Among the hotspots for multi-storey facilities is South Sydney – an area that includes suburbs like Mascot, Zetland, Rosebery and Alexandria – which is less than 10 km from the Sydney CBD and within 10 km of a fifth of Sydney’s population.