E-commerce driving industrial demand

Consumers are sparking a new reliance on e-commerce because of Covid-19 – and leading commercial property developers, owners and managers Goodman say that is causing a new trend in warehousing and distribution facilities.

Consumers have responded to the risks of Covid-19 by embracing the convenience and safety of online sales and contactless delivery. Reliance on e-commerce has grown accordingly with a 30 per cent increase in online spending over the 6 months to June 30, compared to the same period last year, according to the New Zealand Post e-commerce spotlight.

James Spence, Goodman's Director - Investment Management, says that during alert levels 3 and 4, through late March and mid-May 2020, the NZ Post spotlight reported an average weekly online spend in the food, groceries and liquor category more than 100 per cent higher than 12 months earlier.

The trend has been sustained beyond the initial lockdown period, highlighting a continuing shift in consumer behaviour with online sales making up almost 12 per cent of all retail sales in New Zealand for the six months ended June 30.

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Warehouse and distribution facilities are a key link in the supply chain providing companies with the physical infrastructure to manage inventory, Spence says. Efficient freight networks link these businesses with suppliers, customers and end consumers.

"With a high-quality portfolio focused on urban logistics, Goodman is uniquely placed to benefit from the growing demand for distribution facilities close to consumers. The pandemic is accelerating this trend with businesses responding to the opportunities of a growing online marketplace."

NZ Post is an example of a customer having to expand its property requirements to accommodate the growth in e-commerce. The business has taken additional space at M20 Business Park in Wiri and renewed the CourierPost lease at 23 Underwood Street, Highbrook. The parcel delivery service is one of four NZ Post businesses located within the award-winning estate.

Recent research from commercial real estate company CBRE indicates that more than 60 per cent of logistics and distribution businesses surveyed are considering expanding their property requirements within the next two years.

"These structural trends are positive for Auckland's industrial market, supporting high occupancy levels and strong leasing results," says Spence. "It is also being reflected in a renewed level of development enquiry."

Goodman currently has six development projects under way in Auckland with two larger build-to-lease projects ready to commence. The eight projects include expansions for OfficeMax at Highbrook and Ingram Micro at M20.

Highbrook-Crossing Units. Artist Impression Image / Supplied.

Other projects available for lease, include:

•Highbrook Crossing Units, Highbrook – a multi-unit development located adjacent to all the amenity at Highbrook Crossing. The warehouses have associated showroom/office space and range in size from 335 sqm to 595 sqm.

•20 El Kobar Drive, Highbrook - one of the last large sites available at Highbrook. With a 10,000 sq m warehouse planned, customers need to act now to secure the opportunity and have input into the final specification.

•70 Plunket Avenue, Wiri - positioned on the corner of Plunket Avenue and Cavendish Drive and over 9000 sqm. This is a rare opportunity in this strategic location near the Southern and the South-Western Motorways.

•14 Timberly Road, Mangere - close to Auckland Airport, this is a 4,570 sqm warehouse facility with extensive secure drive-through yard completing end of 2020.

70 Plunket Ave. Artist Impression Image / Supplied.

Goodman's development programme continued uninterrupted through Auckland's level 3 restrictions during August. All projects under construction remain on schedule, with staggered completion dates between now and February 2021.

Spence says: "Urban logistics is an integral part of the modern supply chain and our development pipeline continues to provide customers with high-quality business premises close to major transport networks in New Zealand's largest consumer market."

With Highbrook Business Park 93 per cent complete, and few greenfield sites remaining in the portfolio, Goodman is looking to acquire new sites that provide a future pipeline.

The recent acquisition of properties on Savill Drive and Alderman Place in Otahuhu is an example of this strategy. The properties, which adjoin the Trust's Savill Link industrial estate, encompass 13.3ha of land area. Currently leased as yard space, they are expected to support the development of 70,000 sq m of new industrial facilities over time.

"Maintaining a development capability is essential if we are to meet the future supply chain requirements of our customers," Spence says. "We're being disciplined with our investment decisions, concentrating on infill sites and other opportunities that provide the connectivity with major freight and transport infrastructure that fulfilment and logistics businesses demand."

For more information about the developments planned and for lease contact: [email protected].