Multi-level warehousing has quietly debuted in Sydney with the first sales in Revesby’s unique three-level boutique industrial complex The Mavis Quad transacting this month while a handful of facilities remain earmarked for the city’s inner south.
Popular across Asian centres such as Hong Kong and Shanghai where the trend began, and springing up across Europe, multi-level warehouses have been on the radar of Australian developers for the past few years. Spurring them on is a need for more cost-efficient as well as attractive ways of building industrial property. While such developments are yet to be seen in substantial volume, research by major property companies such as CBRE and JLL indicate the economic climate is now ideal for the asset class to thrive.
A key driver is the escalation of e-commerce which is triggering the need to warehouse goods in locations best for fast efficient delivery to urban centres. Another significant factor is the soaring value of industrial land especially in inner Melbourne and South Sydney. In the past five years, those areas have effectively seen price hikes of 90.9% and 67.3% respectively, far outstripping the rate of rental growth and eroding developer margins according to CBRE’s report, On the Up and Up: the Rise of Multistorey Warehousing in Australia.
Combined with the willingness of occupiers to pay more for prime locations, multistorey developments could start proliferating sooner rather than later says CBRE’s Head of Retail & Logistics Research Kate Bailey.
“This is an emerging market in the industrial space and this type of development is set to grow in popularity over coming years,” Ms Bailey observes. “We forecast an additional 350,000sqm of distribution space will be required annually in Australia to service growth in e-commerce, with South Sydney and inner Melbourne to be amongst the highest growing areas in the country.”
Logistics consultancy TM Insight echoes CBRE’s findings, estimating demand for warehouse space in inner Sydney will hit about 300,000 sqm within the next four years and make multi-level facilities the only logical solution. And leading industrial developer Goodman Group which has been at the forefront of the asset class in Asia also has also announced its intentions to build multi-level properties in and around Botany near the city’s major port.
Paving the way
Among the unique multi-level offerings to hit the market is The Mavis Quad complex. Proudly billed by its developers Potter George as a project that “rejects the standardised model”, the designer-style project has packaged its factory units within an attractive upscale building. Industrial and commercial spaces as well as basement storage ‘vaults’ are neatly organised behind a chic, architect designed façade. Access to the units and ‘vaults’ is undercover via 8-metres-wide driveways throughout.
The complex has struck a chord: 15% of the $50 million project was snapped up within the first few weeks of its launch this month and buyer inquiry remains strong. The Mavis Quad – named after its street address and configuration in four wings - contains 44 industrial units (98sqm to 320sqm) priced from $495,000 to $1.275 million and 90 storage lower ground ‘vaults’ (18sqm to 120sqm) starting at $90,000. The complex sits on an 8433 sqm site located in one of the most heavily populated regions of the city, 29 km south-west of the CBD and close to the major M5 and M7 Motorways linking Sydney to the northern and southern states. When completed early next year The Mavis Quad will be available to occupiers 24/7.
Potter George principal Phillip George says while The Mavis Quad may not be Sydney’s the first multi-storey factory complex he believes it is the first in Australia to “go underground” and offer basement ‘vaults’.
“Our vaults have a 4.5 metre ceiling height, with the other beauty of them being undercover access,” Mr George says. “Security is extremely high which makes the vaults suitable for tradies who need to store valuable tools, or people who want to store wine collections and other precious items - which is what we find consumers want these days,” Mr George said.
Meeting the market
Investors are dominating inquiry over owner-occupiers says selling agent Robert McLaurin from Niemeyer Commercial Industrial Property. “If you went to buy a 100 sqm unit between $500,000 and $600,000 you wouldn’t find one so it (The Mavis Quad) is the right size and price point - and at the moment doesn’t have any competition. The bulk of inquiry is from investors who aren’t getting a return on anything else right now, as in this space they’re going to receive a 5% net return.”
Buyer profiles range from the owner of a professional property services agency, while another several service stations in the area and needs storage for office documents. “We’ve found the wide driveways are greatly appealing to buyers as is the high security and CCTV cameras, especially as the basement ‘vaults’ as opposed to the factory units above them are geared for storing large items,” Mr McLaurin says. “They (the vaults) are more for use by such people as hobbyists who want somewhere secure for their jetski, trailer, caravan, or for files they’ve run out of room to keep in their office.”
Buoyed by the warm reception to The Mavis Quad, Potter George is actively looking for more sites suitable for multi-level builds in Sydney’s south-west as well as inner west around Five Dock and Marrickville. The company will also continue its strategy of creating more upmarket offerings from the ground up, rather than converting existing industrial spaces, Mr George says. “Why should industrial workers have to work in something that’s not attractive or pleasant?” he says. “We ensure there’s nice landscaping and outdoor areas. People shouldn’t have to spend their days in a tin shed or somewhere ordinary.”