COVID-19 demand forces Australia Post into new industrial spaces

Australia Post has taken a new industrial property at 123-135 Kewdale Rd, Kewdale.
Australia Post has taken a new industrial property at 123-135 Kewdale Rd, Kewdale.

A COVID-19-driven e-commerce boom is forcing action amongst freight companies, with Australia Post among the latest to immediately expand its operations by taking up new industrial space.

The iconic Australian packaging service has taken on two new industrial warehouses in Perth, totalling 11,000sqm in the suburbs of Kewdale and Welshpool, after COVID-19 dramatically increased the number of packages being handled.

It comes amid an “uptick” in enquiries for quality industrial space from logistics providers “as a direct result of the pandemic”, according to JLL’s Head of Industrial Western Australia, Nick Goodridge.

“Distribution centres are the hub of this activity and transport and logistics operators have been actively seeking advice on what space is available in the short-to-medium term, with flexibility to scale up if required,” he says.

The positive news shows not all asset classes will be negatively impacted by COVID-19 and the increasing demand potentially paves the way for higher rents and longer-term leases in the sector.

JLL’s WA Research Manager, Ronak Bhimjiani says the move toward ‘domestic supply chain independence’ is not just happening in Perth but on a national scale.

“Consumer habits rapidly changed during the pandemic, with online deliveries for products and food supplies becoming the new norm during the isolation period,” Bhimjiani says.

“This trend is set to continue as many consumers adapt to the ease and convenience of shopping online and businesses further improve efficiencies from a logistics standpoint.

“The business level response to COVID-19 is likely to result in an examination of alternative supply chain and logistics solutions such as re-shoring of resources.

“Secondly, a reversal of lean supply, or ‘just in time’ (JIT) inventory is expected, especially for high-turnover goods as firms decide to increase their inventory levels in the long term given the uncertainty and disruption faced during the pandemic.

“These two business measures are likely to increase demand for industrial space going forward.”

Similar trends are already been seen in Sydney and Melbourne with players reporting industrial leases flying off the shelves with no expectation for demand to ease in the medium-term.