Only way is up for multi-storey warehousing as demand booms

High-rise industrial property is the growth engine for the industry, with estimates that more than 350,000 square metre of multi-storey warehouse space is expected to be delivered in Sydney over the next five years.

Lack of available space has led to an explosion in demand for multi-storey properties that has also led to a sharp rise in land values, particularly in the tightly held Melbourne market.

A new CBRE report highlights 14 notable multi-storey projects in the Sydney pipeline, including the 172,702 square metre LOGOS development at Mascot, scheduled for completion in late 2026.

Other significant projects include a 51,664 square metre three-level Goodman warehouse due to be delivered in the first three months of 2024 in St Peters in Sydney’s inner west.

Goodman chief executive Greg Goodman said at the group’s recent results meeting that multi-storey developments contribute $6.8 billion of the industrial giant’s current work in progress.

CBRE regional director Cameron Grier said with vacancy close to zero, rents and land prices were skyrocketing.

CBRE’s The Rise of Multi-Storey Warehousing report says high land values, low vacancy rates and minimal new land supply are having a significant impact on the Sydney industrial and logistics market, where vacancy has hit at an all-time low of 0.4 per cent — the tightest in the country.

In tandem, the average super prime net face rent is expected to maintain double-digit annual growth between 2022 and 2026, with the greatest movement in rents of above 12 per cent each year expected to occur in the very tight South Sydney area.

CBRE’s head of industrial & logistics Research Sass J-Baleh said cities such as Hong Kong, Shanghai and Tokyo had built vertical warehouses to keep up with occupier demand for precincts with extremely limited space.