Australian industrial and logistics sector proven resilient, says Collins International

In a Q2 Industrial and Logistics market update by Colliers International, findings show, “While not immune to the rapidly changing market conditions, the Australian industrial and logistics sector has proven to be resilient so far, underpinned by the exponential growth of e-commerce as well as the reallocation of capital away from other sectors. The pandemic has emphasised the importance of logistics as a key cog within the economy, and occupiers will have to further embrace changing consumer preferences.”

The report says that certain subsectors have outperformed in the current economic environment and this has been skewed towards online retailers where their market share has grown substantially. The value of e-commerce has increased exponentially as a result of COVID-19 and this structural and cultural shift is expected to be permanent.

“Looking ahead, the good news is that the impact of the pandemic is expected to be softer in the industrial and logistics sector, with demand for e-commerce products and grocery items increasing daily. Moreover, the shift in supply chain strategies from a “just-in-time” inventory system to increased levels of safety stock should bolster the need for industrial inventory and keep development pipelines active.”

Online retail sales has grown 31.9% in the year to June 2020, up from 13.6% in January. By proportion, online retail accounted for 9.7% of total retail sales in June compared to 6.1% a year ago.

There has been an adoption of an omnichannel approach: retailers have moved quickly to strengthen their online presence and e-commerce platforms and blur the boundaries between these and physical stores. “In recent months, we have seen Woolworths and Amazon among others commit to new facilities to drive their online and automation capabilities,” says the report. “Co-warehousing and other flexible warehousing options are being explored in Australia to help cater towards large fluctuations in demand and a shortage of viable space in key markets.”

You can read the full report here.