Strong Demand for Logistics Space Spurs Need for Better Flooring

logistics warehouseLogistics managers should consider warehouse mezzanine floors from suppliers such as a viable solution to maximise space, especially in cities where demand has exceeded the available supply.

In Melbourne and Sydney, property experts said that “last mile” e-commerce deliveries are driving the need for more warehouse space. As e-commerce would continue to occupy more space, there is a need to consider alternative options for using warehouse facilities.

E-Commerce Footprint

Colliers data showed that e-commerce shipments now represent 27 percent of Western Sydney’s estimated 150,000-square-metre industrial space, up from just six per cent two years ago. On the other hand, CBRE expects the sector to account for 11 percent of all retail transactions by 2021.

It won’t be surprising then if more companies clamour for more storage facilities. Aside from the e-commerce industry, other product distributors are working to fulfil the increasing demand for next-day deliveries by seeking facilities within the shortest possible away from customers.

The entry of Amazon in Australia influenced their decision to do so, as the e-commerce giant stirred tougher competition.

Industry Powerhouse

Amazon’s decision to lease a warehouse in Dandenong South has strengthened Melbourne’s status as an industry powerhouse. Despite the much-publicised lease, developers in the city remain reluctant to build new facilities without having pre-commitment deals with potential tenants.

This manifested in a Savills Research report, which noted that pre-leasing deals and “owner-occupier developments with speculative development” will lead the next series of construction projects in the near future.

In March, industrial leasing activity in Melbourne comprised more than 755,000 square metres, down 15 percent year over year.

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Warehouse mezzanine floors serve as a good option for those who want to double their floor space, instead of scouting for a new industrial lease. A new leasing deal can be difficult to secure especially when you want a location near your customers.