It’s no secret that the industrial sector has been booming but problems with supply and planning constraints are stunting the growth of Covid’s real estate “golden child”.
Ethos Urban planning director and national industrial sector specialist Angus Halligan, who will present at The Urban Developer Industrial Property vSummit on September 28, said that industrial land supply issues were being compounded by state-specific complexities.
“Sydney has unlocked a lot of industrial land such as that at Aerotropolis and Mamre Road Precinct (main images),” he.
“But the headaches are in having to develop infrastructure in those areas which means that while there is land identified for release, we can’t unlock it and applications are not moving through fast enough.”
Correctly zoned land might be available, he said, but that was only half the story when answering the supply question.
“There is a burden on being the first developer in these newer precincts due to the associated costs with road and water infrastructure. You have a laundry list of development application inputs.
“Oftentimes in Sydney you’re effectively developing State Significant Developments, so the requirements on the applicant to build a warehouse in Western Sydney are not much different from if they were building a tower in Sydney CBD.
“You’re put through the ringer in terms of how to document it.
“The answer to that which is coming through is working with adjoining land owners. This has been critical to unlocking these sites; collectively trying to understand and work together to prepare the necessary documentation.
“Collectively you have greater power to work with Transport NSW and other stakeholders, so those landowner groups are becoming essential.”
Industrial sector developers are facing these planning issues in NSW in particular, while in Victoria a lack of earmarked land is causing problems.
“In Victoria, there is a lack of clear guidance from the state for new tracts of industrial supply. The Dandenong South corridor is largely taken up and in the absence of corridors as identified by the state government, the market is turning to infill,” Halligan said.
“As a result, while it is a few years behind Sydney when it comes to vertical warehousing, that product is starting to come into the market.”
With a handful of vertical warehousing projects on the go in Sydney and one in Victoria, Ethos Urban and other planners and developers are facing increasing challenges with design and planning.
“Everyone is interested in the challenges involved, as they certainly are taking on a new level of complexity, but the vertical model takes a step up in architectural offering compared to previous warehouses,” he said.
“On the outskirts of the city you could construct a warehouse quickly, but with vertical offerings comes this need for visual impact assessment.
“We’re seeing a need for early consideration of facade treatments and what is this going to look like, as lots of developments creep into areas that have mixed use rather than just outer periphery locations.”
These complexities and the length of time it takes to get a development application has led developers to look to other markets.
“In absence of an immediate answer to Sydney’s planning deadlock, our clients are looking at this issue and some are looking further to South-East Queensland and Victorian markets as being an answer to that problem.
“Great outcomes can be achieved but they are slow to manifest.”
The Urban Developer Industrial Development vSummit will take place on Thursday, September 28.
