Victoria’s government responded to the pandemic by fast-tracking a number of mostly shovel-ready major infrastructure projects. This added to the already substantial amount of construction on the drawing board, from Australia’s tallest tower to A-grade office properties in the CBD. Further fuelling construction is the more than 1 million-plus square metres space planned to meet the sharp rise in demand for logistics and industrial space since the pandemic began. It will be the highest volume of such property ever supplied to the Melbourne market, and follows a series of deals last year by retail and logistics operators.
The pre-committed Melbourne space is also the greatest chunk of the estimated 2.2 million square metres of industrial and logistics space scheduled for completion this year (current lockdowns withstanding) across Sydney, Melbourne and Brisbane, according to a Knight Frank report. Among these developments are two more micro-fulfillment centres (MFC) - small-scale/compact warehouse facilities closer to consumer markets – to be built by Woolworths in partnership with Takeoff Technologies.
More speed less haste
These are in addition to the shopping giant’s newly launched MFC at the back of an existing 4300 square metre Woolworths site in Melbourne’s Carrum Downs, a major leap forward in that it allows an average of 10 orders to be processed in just four minutes as opposed to a manual online order time of about 30 minutes which involves handling and dispatch. (MFCs use advanced automation and shelving to fulfil online orders for click-and-collect and home delivery.)
Similarly, Coles is constructing a 28,287 square metre automated customer fulfilment centre (CFC) – the Midwest Logistics Hub - at Truganina in Melbourne’s west. Completion is scheduled for next year. The builds come on the back of record growth in online sales, Coles’ 2021 half yearly result showing an almost 50 per cent growth in e-commerce sales to generate about $1 billion in sales revenue, and Woolworths reporting a 62.4 per cent jump in average weekly online traffic in the same period.
Multi-storey warehouses are also on the drawing boards of many large corporations thanks to the e-commerce boom, Knight Frank states in its July 2021 report “The last mile race challenging Urban Logistics”. Among these is a multi-storey warehouse planned by Goodman for its Port Melbourne industrial site with work expected to start in the next couple of years.
Knight Frank associate director Katy Dean said the surge in e-commerce, retail, transport and logistics and manufacturing demand during the pandemic had pushed new development completions to an historic 13-year high in 2020. “The growth in new facilities related to e-commerce/fulfilment demand is quite remarkable, growing from around 80,000 square metres in 2019 to almost 300,000 square metres in 2021,” Ms Dean said. Demand for logistics and distribution centre space alone would see the volume of new supply in Melbourne in that segment grow from below 50,000 square metres in 2019 to around 240,000 square metres in 2021, Ms Dean added.
Fortis forges ahead
Lockdowns did not stop large developer Fortis announcing this month that it had snapped up two new South Melbourne sites with the intention of filling them with $110 million of commercial projects, namely premium office and retail offerings. The first project at 313-317 Kings Way entails 18 levels of A-grade space – full floorplate executive-style offices - affording uninterrupted views across the Melbourne CBD and Albert Park. It will also offer the almost mandatory end-of-trip facilities now expected of such developments. Planning permits are to be lodged next month. A more modest development comprising ground floor retail and seven levels of office space is slated for the second site located at 34 Eastern Road. Construction is scheduled to start later this year.
Construction of Australia’s tallest tower is still scheduled to start early next year with a five-year completion goal. The planned 102-storey, 366-metre high tower is part of the $2 billion redevelopment by Beulah of the BMW site on the corner of Southbank Boulevard and City Road in Southbank. If completed as planned, the Southbank tower will rise well above Australia’s current tallest structure, the Gold Coast’s 322-metre high Q1. A sister tower comprising 59 storeys at a height of 251 metres is also planned. Both towers will hold offices as well as hotel rooms and residences, be constructed in a such a way as to make them appear to curve and twist, and feature much greenery including trees on the exterior balconies.
Approved in April last year, the Beulah development was high on the list of those fast-tracked by the Victorian government in response to the impact of the pandemic on the state economy.