Stockland increases warehouse stock to cope with surge in online store

ASX-listed property developer Stockland Corporation has secured approval for the third and final phase of its 28ha Ingleburn logistics park in Sydney’s south-west.

The $58 million phase will add seven warehouses in three buildings over approximately 9.5ha to the planned industrial area, 50km from Sydney.

The development was greenlit by Campbelltown City Council last month and comprises approximately 49,000 square meters of land area.

Stockland says work has already begun and is expected to be completed in the third quarter of next year.

Stockland’s executive managing director for workplace and logistics, Tony D’Addona, said that with phase three, Stockland was accelerating its logistics pipeline in response to high demand and low vacancy rates being driven by increasing investments in onshore supply chains.

“Our logistics assets on the East Coast alone total over 1.2 million square meters of gross leasable area,” D’Addona said.

“And we recognize South West Sydney as a critical market for logistics space where our established assets in Leppington, Ingleburn as well as Padstow and Warwick Farm have a combined book value of over $590 million.”

Stockland’s approval comes at a critical time for Australia’s industrial and logistics sector, which at 0.8% has the lowest vacancy rate in the world.

In fact, commercial property services and investment giant CBRE said an additional 1.8 million square meters will be needed in Australia over the next five years to meet the expected growth in online shopping.

CBRE’s latest e-commerce trends and trajectory report, which analyzes the continued growth of the industry in Australia and its impact on commercial property, showed that online sales have grown from 9% of total sales spend retail in 2019 to 14.3% in July this year.

Fueled by changes in retail habits during Covid lockdowns, online sales are expected to reach 17% of all retail spending by 2026.

“E-commerce has grown dramatically over the past five years, and this continued adoption requires large amounts of logistics space,” said Sass J-Baleh, head of industrial and logistics research at CBRE.

“In the case of Australia, the projected growth equates to a need for an additional 1.8 million square meters of space, amid a chronic supply shortage and a relatively limited pipeline of new inventory.

“This should fuel rent growth over the next few years as occupiers compete for supply, but more generally there is a question of how to facilitate this growing requirement, including whether it is possible to unlock alternative spaces or to intensify the use of available space.”

In June this year, J-Baleh warned Australia needs at least twice as much industrial space as it was built if it wanted to meet the growing demand.

For its part, Stockland says it has $1.2 billion worth of projects in active development across the country. Advanced discussions are underway with potential tenants for the Ingleburn space.

“Many of our clients are existing tenants, who are looking for the next generation of contemporary and sustainable logistics assets that can meet the needs of their growing businesses,” said D’Addona.

Ingleburn is one of 29 logistics properties Stockland has across the country.