Key drivers further accelerate Stockland’s logistics property pipeline

Stockland’s accelerated Logistics property development pipeline is underpinned by ongoing growth in the e-commerce sector and strong tenant demand.

For some time, Stockland has been building on its Logistics property portfolio to meet tenant demand for quality industrial space.

“In recent years, we have been strongly focused on building the scale and quality of our Logistics portfolio with a significant development pipeline in place,” Craig Lenarduzzi, Stockland National Development Manager, Workplace and Logistics, says.

“Off the back of our new business strategy launched late last year – we are further accelerating our pipeline in response to favourable market conditions.

“We have a development pipeline of $6.4 billion¹ of which ~$2.2 billion¹ is either in active development or well progressed in planning.

“Developments currently underway include Melbourne Business Park, one of the largest masterplanned industrial precincts in the rapidly growing corridor of Melbourne’s West.

“While over in Queensland, construction of Stage 3 is expected to reach practical completion late this year at the prime 22 hectare Willawong Distribution Centre estate” he says.

Logistics property demand – origins and effects

Craig notes one of the key drivers for increased growth in the sector is the rise of e-commerce, saying it’s one of the most prevalent drivers over the last couple of years.

“In our recent Shops & Sheds report, Australians spent $42 billion on domestic online retail goods over the 12 months to December 2021, double the level prior to COVID.

“In the same period, online shopping volume was up 15% y/y since pre COVID with NSW leading the growth at 30%.

“We are seeing businesses approach their warehouse space strategies differently to match customer expectations such as free shipping, fast deliveries, and free returns.

“We’re coming off three years in a row of record uptake from a logistics leasing perspective, and we’re expecting that demand to increase,” notes Craig.

With such fierce demand, tenants are struggling to find high-quality, well-positioned logistics space.

Moving puzzle-piece

With the logistics pipeline being a future solution, Stockland is mindful of how it can meet its customers’ needs within the existing portfolio – comprising 29 stabilised assets with over 1.2 million² sqm GLA and a value of ~$3.1 billion³.

Stockland’s logistics assets are strategically located close to infrastructure and employment and include some of the country’s major distribution facilities.

Craig says Stockland is always available to help. “One of the things that we pride ourselves on is assisting our customers with their growth, which is why it’s so important for us to have a diverse portfolio.

“By having a range of quality assets, we have the flexibility to allow customers to grow with us – the breadth and depth of our portfolio provides us the ability to shift leases, move tenants into bigger or more suitable spaces as they expand allowing us to cultivate long-term property partnerships.

“Drawing on our large portfolio allows us to create more options for our customers so we can work with them to optimise their footprint today and talk about what their growth opportunities might look like tomorrow,” notes Craig.

What's in the pipeline for Stockland

Offering a glimpse into their logistics property pipeline, Craig says there is growing demand through brownfield investment in last-mile locations and greenfield locations in key development corridors.

“For example, two of our significant NSW developments are at the doorstep to the future Western Sydney Aerotropolis and Nancy-Bird Walton International Airport” he continues.

“Leppington Business Park is situated within a newly released industrial precinct – the 10.25 hectare industrial-zoned site is being developed as a master-planned industrial estate comprising three premium warehouse buildings with ancillary offices.

“While the latest development at Ingleburn Logistics Park, Stage 3, is masterplanned to comprise three premium warehouse buildings with ancillary offices. Both benefit from great access to Sydney’s major arterial motorways and are well located with respect to other major industrial zones.

Stockland are always seeking opportunities to build on their strong sustainability legacy and track record – in the development space, they aim to design assets that are adaptable and future-focused.

“As an example, Leppington Business Park and Stage 3 of Ingleburn Logistics Park are both targeting 5 Star Green Star ratings which represents Australian Excellence in sustainable design” Craig says.

Future logistics growth predictions 

With 6 DAs lodged, representing ~$480 million⁴ across ~200,000 sqm GLA, Stockland anticipates continued upward trends in logistics property demand.

Craig expects that with all the different macroeconomic trends and despite headwinds such as inflation, the logistics asset class will continue to perform well.

Retailers, who are expected to continue to demand bricks and mortar retail space are beginning to shift their focus towards logistics spaces with greater efficiencies. Whilst third-party logistics, transport and warehousing tenants will continue to benefit from rising customer expectations⁵.

“It used to be ‘just in time’, but now it’s ‘just in case’ because if there are disruptions to the supply chain, challenges globally, businesses will want to ensure there is enough inventory held to minimise any negative impact. We are seeing companies holding greater levels of stock than they otherwise would.

“We’re well positioned – with such a diverse portfolio of logistics assets and developments, we have the opportunity to help businesses find their space to thrive” he concludes.

¹ Forecast end value on completion – Stockland FY22 Results

² Excludes hardstand and vehicle storage and reflects 100% interest – Stockland Property Portfolio, 30 June 2022

³ Gross book value, excludes inventory land – Stockland Property Portfolio, 30 June 2022

⁴ Forecast end value on completion – Stockland FY22 Results

⁵ Stockland Shops & Sheds: Part #1, March 2022