Industrial In The Limelight: Secular Shirt Or Cyclical Rotation?
2017 was a pivotal year for industrial real estate – with the highest sector returns across many global markets – while retail frequently underperformed. Some attribute these differences to the growing penetration of e-commerce, but historical evidence shows higher yielding real estate, such as industrial, has often outperformed toward the later stages of the property cycle.
Industry 4.0 Marks Inflection Point for Industrial Real Estate & Valuation
• Industry 4.0 is driving significant change within the industrial and logistics property sector. With new technologies being adopted across a range of industry sectors and geographies, both the demand and supply sides of the business are experiencing multiple inflection points.
• This ViewPoint by CBRE Research and CBRE Valuations & Advisory Services identifies the key industrial real estate impacts of the latest Industry 4.0 related technology trends; explains how they will impact the development of upcoming industrial real estate facilities; and envisions their influence on property valuations.
• It is imperative that industrial investors and developers understand the long-term and structural consequences of Industry 4.0 as the property sector transitions into this new era. Developing industrial real estate into a strong and sustainable product capable of withstanding the impact of impending technological change will be critical.
Industrial Research and Forecast Report – First Half 2018
Colliers’ RFR H1 2018 highlights the industrial asset class performance both from a global and national context, as well as the major drivers of growth in 2018 and beyond.
Key findings of the report include:
• There are new and evolving industries that occupy industrial property
• Growing alignments between the retail and industrial sectors will translate to increased demand for industrial space within inner and middle ring Metropolitan precincts (i.e. highly populated areas) – catering to last-mile deliveries
• Sydney and Melbourne markets continue to lead the country, in terms of capital growth, with the concentration of national infrastructure expenditure a major driver
• Interest from offshore purchasers in Australia’s property market continue as investors benefit from freehold property rights, long-term leases, and less government intervention
Employment and Demand in the Industrial Sector – Beyond the Headline Figures
The typical methodology frequently used to project industrial floorspace demand has been to look at the change in the ‘headline’ employment figures of those industry sectors that traditionally occupy industrial zoned land (i.e. Manufacturing, Wholesale, Trade, and Transport, Postal and Warehousing). However, the questions needs to be raised – Is this the most accurate method of forecasting demand for industrial space where historically there has been an inverse relationship between the headline employment in manufacturing (decreasing) and the demand/net absorption for industrial floorspace (increasing)?
This paper highlights the following:
- The headline ABS employment trend figures for the traditional industry sectors occupying industrial zoned land
- The sub-industry sectors that have experienced growth within the overall declining Manufacturing and Wholesale Trade Industries
- The need to look at a basket of employment industries that could potentially occupy industrial zoned land/be a part of an industrial business
- The implication for industrial space going forward, with respect to new (retail) entrants into then Australian market
Savills Industrial Market Quarter Time Q4/2017
This report covers leasing and sales data plus a comprehensive overview and comparisons of market indicators including rents, outgoings, investment yields and capital values.
Industrial Research and Forecast Report | Second Half 2017
Collier’s Industrial RFR H2 2017 highlights the strong demand conditions concentrated within the Eastern Seaboard markets, as well as the factors expected to continue to drive growth.
Key findings of the report include:
- Accessing products is becoming increasingly limited as there are fewer assets available on the market
- Sydney and Melbourne markets continue to lead the country in terms of capital growth
- Over the next six months it is anticipated that yields will remain stable with the long run growth in industrial property values (land, capital, and rent) within the Eastern Seaboard states expected to continue to be supported primarily by the following:
How city logistics is adapting to 21st century life
In the age of ever faster and ever more frequent deliveries to homes and businesses, the issue of how to manage increased demand is rising up corporate and city planning and transport authority agendas. Yet while the authorities are seeking ways to improve the overall efficiency of logistics in cities – at the same time minimizing the adverse impacts of logistics activities, particularly emissions and noise – corporates are striving to provide better customer service at lower costs.
Industrial investment Review
The Industrial Investment Review 2017 explores the year that was, what’s ahead and why.
Industry 4.0 and Distribution Centres – Transforming Distribution Operations Through Innovation
Deloitte University Press
Recent years have seen the rise of connected technologies throughout the manufacturing and distribution value chain. This marriage of digital and physical systems—known as Industry 4.0—has paved the way for increasingly connected experiences that impact everything from product design and planning to supply chain and production.
Beyond the processes of designing and producing goods, however, the technologies inherent in Industry 4.0 can also impact the manner in which finished goods are moved, warehoused, and distributed.
In this paper, Deloitte examine the evolution in distribution centres functionality and explore applications of emerging Industry 4.0–driven technologies to enable a more flexible, adaptive, and productive distribution centres. Finally, we consider the ways in which these new technologies will impact talent needs, business strategies, and data management for distribution centres.
How Can Manufacturing Survive in Australia?
Manufacturing has undergone structural change globally in recent history. The removal of trade barriers, technological advances and labour force mobilisation have driven massive changes in what goods are manufactured, where, how and by who.
For the last several years the manufacturing sector in Australia has been in decline, as has its share of the economy, moving from 9.1% of GDP in 1999 to 6.0% in 2015. In that same time German manufacturing held fast at around 22% of the economy. What has happened to Australian manufacturing? Is Australia transitioning to a post-industrial economy? Where is Australia’s comparative advantage in manufacturing? What are the implications on industrial occupier demand?
Rather than suffer a terminal decline, Australian manufacturing will forge a path into advanced manufacturing, leveraging high quality innovation inputs such as education, training and technological readiness and converting them into high value outputs.
Parcel delivery: The Future of Last Mile
McKinsey & Company
The last mile is seeing disruption from new business models that address customer demand for ever-faster delivery, as well as new technologies such as drones and autonomous ground vehicles. McKinsey argue that the future last mile offers tremendous opportunity for existing and new service providers in the field. However, before companies can move ahead and bring to life the new last mile, they should take one step back, as it is crucial to develop a strategy that suits the market environment and the company’s strength. It is also important to bear in mind the competitive landscape with at least three groups of companies battling for predominance in the future last mile: incumbents, e-commerce players, and highly dynamic start-ups disrupting the marketplace.
JLL Industrial Market Update
JLL has developed InSite, a one-stop-shop for all the latest trends, transactions and research on the industrial environment across Australia. Updated every quarter, Insite provides information on all the key industrial markets – Adelaide, Brisbane, Melbourne, Perth and Sydney.