Over the last 10 years, due to the growth of the e-commerce sector, the demand for commercial real estate has continued to grow.
Since the COVID-19 pandemic, there’s been an exponential spike in e-commerce with customers turning to online ordering not only for their weekly groceries but also for fashion and hobbies, etc. This forced suppliers to scramble for additional warehouse space.
A turn towards more importing goods, rather than manufacturing has also changed the landscape of commercial real estate to more demand for drop-ship style warehouses and distribution centres.
The sheer size of Australia has meant we need more distribution-style centres to cater to the country’s sparsely spread population.
Also due to the pandemic, the construction industry slowed down with the many supply chain issues and materials shortages.
The estimated population growth for Australia over the next 3 years is 1.9 million. CBRE Research estimates each person will need an additional 4.3 sqm of industrial space to support their consumption, that’s 5.4 million sqm in the next 3 years. To bring the market into balance, we need 3.7 million sqm of industrial space but only 2.5 million sqm is currently in construction.
Australia now has the lowest vacancy rates in the world for industrial property, sitting at 0.6% according to CBRE Research. Whilst this is good for investors, it shows up a chronic undersupply of commercial real estate in Australia.
Types of industrial properties.
- Storage units.
A storage unit development is usually a smaller commercial building housing a group of small storage rooms. Tenants are usually residents moving house or people who have downsized and need space to store excess items.
Warehouse developments are primarily designed with a specific tenant in mind. They’re generally a less flexible space than a factory unit because they’re purpose-built. They can range in size from a small warehouse for a start-up, to a multi-level warehouse like a Bunnings warehouse.
See Bunnings Rozelle and Bunnings Pymble projects or read our case study here: https://ftigroup.com.au/resources/case-studies/.
- Factory units.
Industrial units such as factories are more commonly being set up in industrial estates where there’s a large garden component and better amenities for tenants. Developments like this are usually designed as a group of factory spaces with flexible spaces so the tenants can decide how they use the space. Many factory units have an office incorporated into the design, and a mezzanine area to maximise the vertical space.
See The Mirvac Switchyard and Harvey Norman Macgregor Homemaker Centre projects or read our case study here: https://ftigroup.com.au/resources/case-studies/.
- Data centres.
Data is increasingly becoming a commodity for many businesses and the data needs to be stored somewhere. A data centre is a structure created specifically to contain computer equipment and related elements including networking and storage systems.
- Large-scale distribution centres.
The bigger supermarket chains are beginning to operate more fully automated distribution centres to service their customers. Dark grocery stores move millions of groceries each week, without a single human hand touching the products. Woolworths’ automated warehouse in Melbourne’s outer-east does just that, it’s the size of about two-and-a-half Melbourne Cricket Grounds.
See Woolworths Auburn and Woolworths Moorebank projects or read our case study here: https://ftigroup.com.au/resources/case-studies/.
Increased investment interest in industrial property.
Higher asset value and demand-led new supply for the industrial property have created increased investment interest in this sector.
A new technological age has brought a new generation of automation in industrial premises which has turned many premises into prime-grade assets which have helped position the Australian industrial property market as a mainstream investment.
The strong returns and the lengthy leases create a more reliable and consistent return for investors and self-managed super funds. Investing in commercial property generally means the tenant pays for the rates, insurance, taxes, maintenance, and repairs instead of you having to deal with it, which is how it’d be for a residential property.
The new look industrial space.
Today’s demand for industrial property and the change to the type of tenant using these buildings mean that most older warehouse buildings wouldn’t be suitable. Demand for industrial space also increased from non-traditional tenants like start-ups, showrooms, cafes, boutique breweries etc.
Many of these buildings now contain large amounts of offices as our industrial base has changed from manufacturing to more storage and distribution. Newer industrial buildings often have large column-free spaces with about 15-20% of the building’s space available as offices.
New industrial developments now have more modern offices, communal kitchens and bathrooms, and attractive facades with street appeal. Buildings are generally larger with higher ceiling space for greater storage capacity and have greater technology embedded with them to allow for automated operations. They may have strong and more durable concrete floors constructed to accommodate taller pallet racking and heavier-duty forklifts.
Today’s industrial tenants prefer to be situated in cleaner, newer, better constructed and laid out premises with better access for trucks loading and unloading.
A factory or warehouse that includes part office and part factory often has high ceilings for the factory area to accommodate trucks and pallet racking and a small office area. There is often wasted space above the office so a mezzanine may be designed into the project.
A mezzanine is an intermediate floor between the floor and the ceiling of the warehouse allowing for an extra level to maximise the vertical space, providing extra sqm without extending the building.
Mezzanines can be used for a variety of things such as additional assembly areas for a factory, added storage for a warehouse, or offices and showrooms.
All mezzanines need stairs and need to be a form of egress. The most common types of construction for a mezzanine are steel or concrete.
- A lightweight floor with steel stairs.
Having a lightweight floor with steel stairs is a great option for a temporary mezzanine, and maybe a slightly faster option for construction.
- A concrete floor with concrete stairs.
Concrete is the best and strongest option for a permanent mezzanine. A concrete mezzanine can support much heavier loads than a lightweight floor. Concrete is also a great option for the stairs, they are quieter to walk up and down than steel or lightweight stairs. Quieter stairs within an office space are attractive for some tenants.
FTI Group for industrial developments.
FTI Group is a leader in prefabricated formwork systems, with extensive experience in the construction industry. We’ve supplied prefabricated formwork to construction sites all over the country, including many warehouses, industrial units, distribution centres and storage unit projects.
FTI’s Fast Tread® stairs are ideal for industrial developments for the clean level of finish they provide without having to paint, tile or carpet. This gives you a modern industrial look with clean galvanised steel and raw concrete for the interior design which is perfect for the new-look warehouses.
Along with the Fast Tread® stairs, FTI can offer galvanised metal handrails. This doesn’t only include the handrails associated with the stairs, but many warehouses and factory units have a lot of extra safety rails in the factories and void rails for the mezzanines.
The BlueDeck Composite™ metal decking formwork is an easy option for creating concrete suspended slabs for the mezzanines. The metal decking formwork provides support for the concrete slab and the durable finish creates a neat, clean, low-maintenance ceiling finish for the lower level.
To find out more, contact FTI Group on 1300 751 701.