Amazon eyes off Sydney expansion

Amazon is expanding its operations in Sydney.
Amazon is expanding its operations in Sydney.

US retail giant Amazon is looking to expand its logistics empire through a new distribution centre in Sydney’s western suburbs, with Goodman Group’s Oakdale estate tipped as its likely destination.

The group’s effect on traditional bricks-and-mortar retailers is growing and its activities and those of rival e-commerce players are increasing demand for distribution space.

The Oakdale Industrial Estate in western Sydney is near the M4/M7 motorways and would give Amazon convenient access to Sydney’s metropolitan areas.

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This would allow the US online retail behemoth to rapidly deliver across the city and help it take a larger slice of Australia’s $300 billion-plus retail sector.

Goodman has been attracting tenants to the 89ha estate. Coles committed this year to a 20-year lease of a facility that is due to become operational in 2023.

The company opened its second distribution centre, a 43,000sq m fulfilment centre — about the size of six football fields — at Moorebank, in Sydney’s southwest, last August.

The centre at the Goodman Centenary Distribution Centre would help Amazon expand its offerings and is nearly twice the size of the group’s Melbourne facility at Dandenong South that opened last year.

In addition to its consumer business, the company serves thousands of small and medium-sized Australian businesses who use Fulfilment By Amazon on amazon.com.au.

Amazon’s local Prime multimedia subscription service is posing a challenge to key Australian chains such as Bunnings, Kmart, Target, Big W and Harvey Norman, as well as major department stores.

Prime is Amazon’s flagship subscription service offering a suite of services such as music, e-books, movies and TV streaming as well as discounts on Amazon orders.

The e-commerce group’s fulfilment centre is at the private Pellicano Property’s M2 Industry Park.

It has a 24,000sqm centre there, but the proposed new facility at the Oakdale estate could be up to double that area, industry players say.

Real estate agent CBRE has been linked to the Sydney search but it, the landlord and technology giant declined to comment.

Amazon has extensive ties with the Goodman Group, whose facilities it occupies in the US and Europe, and a local expansion is viewed as logical.

Investors have backed the group’s push into accommodating e-commerce players, and Goodman will host analysts today.

Citi lifted its earnings targets on Goodman as the property group has boosted its development work to about $5 billion. “We are anticipating a relatively uneventful investor day with a focus on the fundamentals, longevity of the development pipeline and third-party demand for logistics,” Citi says.

“We suspect management’s commentary will result in increased investor confidence that 8-10% earnings per security growth can continue over the near to medium term.”

This article originally appeared on www.theaustralian.com.au/property.