Logistics & Industrial Occupier Market Outlook 2024

Structural Trends Structural tailwinds have had a significant bearing on warehouse demand in recent years. Most notably, this has included the greater adoption of e-commerce, which has created a significant boost to occupier demand. While e-commerce could be tied to everyday consumption and cyclical spending, it is a structural thematic given the impacts that it has had and will continue to have on demand.

Despite the e-commerce penetration rate increasing from 9.0% pre-pandemic to its current 13.4%, there remains significant scope for further growth in the Australian market, supported by how underpenetrated the Australian market remains in comparison to other global markets. Millennials have underpinned the take-up of e-commerce in Australia, and with this cohort entering their peak spending years, our view is that the penetration rate will rise to 16.5% by the end of 2027.

Cyclical Spending Demand from businesses tied to cyclical spending is forecast to moderate, particularly over the balance of 2024, as consumers remain cost-conscious. More discretionary-based retailers, including those specialising in household goods, are expected to be less active in the leasing market. Recent retail trade data supports this with retail expenditure for household goods contracting by 4.6% over the past 12 months (based on annual turnover). On the flip side, demand from the construction and automotive sectors is set to increase over the next two years, supported by an emphasis on housing supply from the Federal Government and continued demand for vehicle sales as well as vehicle spare parts and maintenance. The impact of new housing supply will be two-fold as the raw materials and equipment to build these dwellings will flow through a warehouse at some stage, while once the dwellings are complete, it will drive demand for bulky goods, including appliances and furniture.

Over the next two years, approximately 15%-30% of leasing demand is expected to stem from this category, equating to space requirements in the order of 500,000–1,000,000 sqm per annum . A greater weighting is anticipated in 2025 as economic growth improves, thereby supporting increased levels of discretionary spending.

Figure 7. Active Occupier Briefs by Sector

6%

8%

Figure 9. Global E-Commerce Market

8%

46%

Early Phase

Maturing Phase

Advanced Phase

12%

China

50%

19%

40%

South Korea

Brazil

Transport & Logistics

Retail Trade

30%

Manufacturing

Wholesale

United Kingdom

Mexico

Food & Beverage

Other

20%

Australia

USA

Source: Cushman & Wakefield

10% Current Penetration Rate

Japan

Figure 8. National Dwelling Completions

Canada

260,000

Early Phase Overview

Maturing Phase Overview

Advanced Phase Overview

Fed Govt. Annual Housing Target

240,000

• Widespread adoption - E-commerce growth rate slowing • Infill market focus • Large international brand presence • Focus on technology – blurring the lines between online and physical buying • Increased use of same day/ next day delivery

• Sustained e-commerce growth rate • Enlarging e-fulfilment network • Increase in international brand

• E-commerce growth rate accelerating • Embracing e-fulfilment • Limited international brand presence • Online orders are largely fulfilled through existing retail or shared facilities

220,000

200,000

presence and expansion of online capabilities from national retailers

180,000

• Increased demand for

160,000

dedicated fulfilment facilities

• Increasing infill market presence

140,000

120,000

100,000

Source: Statista, Cushman & Wakefield

Source: ABS, Cushman & Wakefield

13 | CUSHMAN & WAKEFIELD | LOGISTICS & INDUSTRIAL

OCCUPIER MARKET 2024 OUTLOOK | 14