Will industrial real estate rise as retail falls?

By Greg Bell

Let's be honest for a minute – industrial real estate isn't the most dreamy idea. Few people spend their spare time thinking about warehouses or factories when they could be fantasising luxury apartments instead. So why should investors on the Gold Coast care about industrial real estate?

The answer is simple: growth. With the rise of e-Commerce and global competition, retailers are having to channel extra energy into their marketing strategies to stay relevant. Meanwhile, demand for industrial property is only getting stronger.

What's happening to e-Commerce in Australia?

The increased uptake of industrial property in Australia has been attributed to the growing popularity of online shopping.

As many know, global retailer Amazon has arrived in Australia, taking up a lease on a warehouse in Dandenong South, Melbourne. Although Amazon's launch was met with some lacklustre responses due to their limited range, they have since revealed a strategy to boost their offering. The Fulfilment by Amazon service, launched on Tuesday 27 February, invites Australian companies to store their products in Amazon's warehouse and have them packaged and shipped by the global retailer.

For customers, this means there will be a wider spectrum of products on offer by Amazon, making it easier to spend the $49 required for free shipping. With more products, incentives for larger order baskets and speedy delivery times, Amazon is setting up to disrupt Australian retail hugely.

How is Amazon increasing demand for industrial real estate?

In order to compete, Australian retailers may need to invest more into their supply chains and e-Commerce strategies.

There can be severe consequences for retailers who fail to adapt quickly. The growing competition for online sales should drive a stronger focus on delivery times and costs to the consumer. As such, retailers are striving for stronger logistic strategies and assessing their need for bricks-and-mortar retail and industrial space.

The key for many retailer will be finding well-located distribution centres. Same-day delivery is a central tenant of Amazon Prime in the United States and may well be on the cards for the future of Amazon in Australia. So, establishing fulfilment centres in reasonable proximity to store branches as well as residential areas will be paramount to succeeding in the e-Commerce sphere going forwards.

At Ray White Commercial Gold Coast, we list some of the best industrial property on the market. Get in touch with us today to discuss acquiring your ideal distribution centre.

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