Australia's Logistics and Industrial Supply Pipeline

WAREHOUSE CONSTRUCTION COSTS Building new warehouses in the current high-cost, high-interest, and labour-constrained environment is challenging to make project feasibilities stack up. Currently, indicative warehouse construction costs average $1,250/sqm, up from $750/sqm in 2020. Multi-level developments in Sydney are substantially higher at $3,000 - $3,700/sqm.

Warehouse Input Costs – Indexed at 100 in June 2020

90 100 110 120 130 140 150 160 170

Going forward, the pace of price growth for construction costs is expected to settle closer to 2.5% per annum. In combination with land values holding steady over the past two years and approximately 180 basis points of yield expansion, economic rents have shifted higher in order to make developments feasible.

Structural Timber

Concrete

Steel

Metal Roofing

Copper Pipes & Fittings

Source: ABS, Cushman & Wakefield Research

Indicative L&I Economic Rents by Market*

Warehouse Construction Costs & Land Values

South Sydney

$1,000 $1,200 $1,400

Western Sydney

Brisbane Trade Coast

$0 $200 $400 $600 $800

Melbourne South East

Melbourne West

Brisbane South

Perth East

Adelaide Outer North

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

National Weighted Land Values ($/sqm)

Indicative Construction Costs ($/sqm)

* Based on current land values, 10% development profit and prevailing construction costs and market yields

Source: BMT, Cushman & Wakefield Research

Source: Cushman & Wakefield Research