Australian logistics platform LOGOS has filed plans for seven warehouses with a total 43,500sq m of lettable space in Melbourne’s north—all of it under a single giant roof.
LOGOS is understood to have paid about $40 million 12 months ago for the 7.8ha site at 21-35 Radford Road in Reservoir, about 12km north of Melbourne’s centre.
The proposal before Darebin Shire Council seeks seven warehouses, accompanying offices, car parking for 265 vehicles, loading docks and signage zones, a café and the removal of an easement and reserve.
According to BCI Central data The warehouses will range in size from 3050sq m to nearly 11,000 square metres.
LOGOS head of development in Australia and New Zealand Troy Bryant said the current market meant the sheds would be mostly built speculatively.
“Our DNA was always to pre-commit to around 60 or 70 per cent of our pipeline, that is built to suit for our customer, and speculative was probably the other 30 per cent,” Bryant said, “and that 30 per cent was just to just to finish off the master plan nicely.
“That has now completely flipped. So we are now probably 80 per cent speculative build and only about 20 per cent build-to-suit.”
Bryant said that was mainly due to strong demand in the market.
“We know we can speculatively build and better control our destiny.
“Number two, we're reducing our exposure risk to construction costs by just building generic product and speculative product. And number three we know that we're seeing still strong rental growth through the construction phase.”
The industrial sector has been warning for more than a year that a chronic undersupply of zoned industrial land across greater Melbourne risked serious consequences for the state’s logistics and supply chain.
Last month the Property Council of Australia released research—commissioned from town planners Urbis—which shows there is only four years supply of industrial-zoned land remaining in metropolitan Melbourne.
As online shopping grabs an increasing share of total retail across the country, the growing need for last mile logistics has seen industrial rents balloon, particularly in Greater Melbourne.
At the time of the Urbis data release, LOGOS Group’s head of Australia and New Zealand Darren Searle warned rents could not keep increasing.
“At some point the chief financial officers around this country are going to say, pause. They’ll say what are we going to do about evolving and making our businesses more efficient,” he said last month.
“I don’t think we’re quite there yet.
“But rent growth will continue in Victoria until such time as we undo some of that supply side,” Searle said. “And the challenge for government is to start unlocking that land, unlocking the services so as to enable more products coming into the market.”
But Bryant said the New South Wales situation was just as bad.
“The vacancy factor in Sydney is nearly zero.
“Which means if you wanted to rent a shed in Western Sydney now for medium-sized business of say 10,000sq m, you don’t have an option. There’s nowhere to go,” he said.
The Reservoir acquisition was one of two big industrial purchases LOGOS made at the time, also snapping up a 21.5ha greenfield site in Huntingwood in Sydney’s central west.
That site was also in the planning stages, but Bryant said they would not be on site for at least another six months.
And that, he said, was a direct result of Sydney’s “archaic” planning system.
“In NSW, the consent authority is actually the state government,” he said. “And they still have to go back to local government for referral agency consent, or referral agency support with agencies like Sydney Water, Transport New South Wales, all those things.
“We always knew the Sydney site has more planning risk.”
