Market Insights
REPURPOSING GAINS GROUND AS LAST-MILE LOGISTICS SAVIOUR
The HomeCo Daily Needs REIT has $4.8 billion worth of neighbourhood retail assets keen to enter the last-mile subsector.
Author: Clare Burnett Urban Developer
Meanwhile HMC Capital last year reached first close for its Last Mile Logistics Fund that targets traditional retail properties that can be repositioned to provide last-mile, omni-channel solutions. Throwing its weight behind the sector, HMC is targeting $1 billion for the fund. It has already secured $350 million from Funds SA and $50 million from the big box retail HomeCo Daily Needs REIT. HMC Capital managing director for real estate Sid Sharma says retailers are working to solve the customer demand for convenience. “Customers of tomorrow will want goods and services accessible within one hour of the demand,” Sharma says. “In a country like Australia with a big land mass, and a population base with low density and high wage costs, retailers need to solve the last-mile cost challenges creatively.” The last-mile landscape The sub-sector’s landscape in Australia is, to say the least, nascent. In-house operators including Amazon, Coles and Woolworths are the most dominant, while Australia Post is among the biggest groups undertaking last-mile operations for other companies. JLL head of logistics and industrial, capital markets, Australia, Ben Hegerty says infill logistics is what everyone is chasing. “You need to be as close to the biggest population as you can, but you can’t build another warehouse,” Hegerty says. The industrial sector is tightening further despite the growing pipeline of development in the works while, according to JLL’s research, national quarterly gross take-up rebounded in the second quarter of 2024, increasing by 97.1 per cent to 732,035 square metres. JLL says this was “driven largely by increased occupier appetite for larger warehouse space with the volume of occupier moves exceeding 20,000 sqm, increasing from three in the first quarter of 2024 to 12 in the second”. And while those occupiers are seeking space, the problem is getting goods to the customer from these larger warehouses. “The theory around last mile is how do you get your goods to the consumer as quick as you can,” Hegerty says. “And people aren’t trending away from consumption—they are consuming more but just in a different way, and not moving away from bricks and mortar either.” AusPost research says that in the second quarter of this year, an average of 5.7 million households shopped online— that’s a 3.8 per cent increase on the same period last year. However, the ability to increase orders is being held back by decreasing delivery times. Shipping software firm Shippit’s 2024 State of Shipping Report found that in 2018 standard shipping promised at an Until recently, Australian last-mile logistics had been a goal rather than a reality. Now, a number of major players are making it happen. In July, Goldman Sachs Alternatives announced it had acquired 65,300sq m of leasable last-mile logistics space across Adelaide, Brisbane, Perth and Melbourne.
14 – October / November 2024
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