How vital are industrial properties to the economy?

New report quantifies the value of goods moving in and out of Australia's industrial facilities

How vital are industrial properties to the economy?

Industrial properties facilitate the movement of goods valued at $1.2 trillion annually across Australia, according to a recent study.

The research, conducted by Oxford Economics Australia for the Property Council of Australia, revealed the importance of property’s workhorse assets – industrial properties – to the nation’s economy, with these assets playing a key role in handling goods that accounted for 38% of household consumption in the fiscal year 2022, summing up to $423 billion.

“This is the first time we’ve been able to quantify the value of goods moving in and out of Australia’s industrial facilities, and the number – more than a trillion – is significant,” said Matthew Kandelaars (pictured), group executive policy and advocacy of the Property Council.

“While they don’t always attract the same attention as other forms of real estate, industrial facilities are critical to not only moving goods into Australian homes, but they are also our gateway to the world, with more than half of the goods moving through our sheds being imported or prepared for export.”

Kandelaars underscored the need for increased industrial space to keep pace with consumer demands, with the study indicating a significant imbalance between supply and demand for industrial spaces, with vacancy rates as low as 1% nationwide.

“Just like the residential market, where we know about the impact of tight vacancy rates on renters, the supply of warehouses is also drastically short,” he said. “And just like in housing, the lack of supply can have major negative flow-on effects on delivery times, logistics and of course cost. Considering how important these assets are to our economy, the status quo is not sustainable.”

To mitigate these issues, Kandelaars advocated for the reconsideration of zoning and planning laws to facilitate the expansion of industrial assets, crucial for maintaining efficient supply chains.

Further insights from the Oxford report show that 44% of the goods processed by these industrial sites serve other businesses both locally and internationally, with 34% reaching Australian homes. Additionally, more than half of the goods are involved in import or export activities.

The pandemic has underscored the importance of resilient supply chains, with Kandelaars calling attention to the challenges of finding suitable land for new warehouse facilities. These include zoning restrictions, utility connection delays, and inadequate infrastructure, which together pose significant barriers to meeting the demands of Australia’s growing population.

Proposed solutions include the development of multi-storey warehouses to optimise space utilisation and the adaptation of planning systems to support investment in industrial properties.

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