 |
| Image: Thanks to Industrial.edq.com.au |
Townsville's industrial space will be critical to the future recovery of this struggling economy as one of the Turnbull government's trial sites for Smart Cities.
One of the largest regional cities in Australia, Townsville has aspirations to become an industrial powerhouse and cement it's identity as the Capital of North Queensland.
The federal government, however, has structured the funding with conditions hinging on the delivery of the Smart "City Deal", which seeks to drive funding by the government, private development corporations and crowd-funded small business initiatives.
Industrial land sales median prices have not improved year on year for six years despite a steady drop of available land stocks especially in 5000sqm to 1Ha category.
Keeping an eye on this sector as a lead indicator for a more sustained residential sector is advisable. It’s the cash and jobs creation sector of the market which has been impacted significantly.
As the economy transitions from an industrial age to the artificial intelligence age, this sector of land ownership will continue to be vulnerable with flat or negative capital growth anticipated.
And as the "multi-channel" retail, distribution and logistics strategies evolve as online shopping behaviours grow in the coming decade, the grading of industrial property will involve with it.
A consolidation of space by major retailers is expected in locations where a critical mass of foot traffic is projected, servicing a distribution of goods to other locations and even building new markets.
And as the "multi-channel" retail, distribution and logistics strategies evolve as online shopping behaviours grow in the coming decade, the grading of industrial property will involve with it.
A consolidation of space by major retailers is expected in locations where a critical mass of foot traffic is projected, servicing a distribution of goods to other locations and even building new markets.
The feasibility of manufacturing will be dependent on the city's adoption of innovative, efficient robotic technologies and low-cost transport systems to cost-effectively supply consumers abroad in Oceania, Asian and broader international markets.
 |
| Herron Todd White Property Update Nov 2016 |
With the arrival of Amazon in the Australian marketplace anticipated in 2017 and the proliferation of global digital retailers, manufacturers and wholesalers are reaching out directly to consumers.
Cutting out the middleman and small to medium size "bricks and mortar" domestic retailers is an aggressive plan for the mega-retailers to gain market share as part of their business plans, despite credible evidence saying consumers prefer to shop online and then go and buy in a "bricks and mortar" store.
Although domestic retailers have won the lion’s share of revenues from domestic online consumer spending in the fashion, food, electronics and toys markets, the use of retail shops are expected to transform into integrated distribution centres serving as "multi-channel" retailers.
Henderson Global Investors research into the "Impact of technology on real estate; implications for retail and logistics", reported that "The challenge multi-channel retailing presents landlords is fairly clear cut. Quite simply, retailers need fewer stores. They will seek to consolidate their operations in locations that have critical mass and are able to generate footfall, while servicing other geographies, and maybe even new markets, using the internet."
"Town centres probably have the most to lose in the multi-channel future, with their fragmented ownership making it hard to defend against e-commerce. Major cities and historic locations globally, where there is significant tourist top up spend, are possibly the most defensive locations.", Henderson Global reported.
Based on this observation of "multi-channel" retailing, further pressure could be ahead for Townsville's city heart retailers already struggling. As limited tourist throughput is present in this marketplace, significant challenges could be expected moving forward for the Flinders Mall and surrounding City retailers.
Based on this observation of "multi-channel" retailing, further pressure could be ahead for Townsville's city heart retailers already struggling. As limited tourist throughput is present in this marketplace, significant challenges could be expected moving forward for the Flinders Mall and surrounding City retailers.
 |
| NAB Online Retail Sales Index June 2016 |
New retailing strategies such as online drop-shipping adopted by millions of affiliates of the mega retailers like Amazon, Alibaba and eBay are offering free shipping strategies.
Consumers have affordable access to quality international products and brands at manufacturers prices. This is causing retailers like The Iconic to invest in large distribution facilities in industrial areas of suburban Western Sydney to accommodate the growth in online spending.
Similar industrial facilities are earmarked to the west of Townsville on the Woodstock-Guru and Flinders Highway for a proposed industrial and export estate which is more likely to service existing and value-added agricultural, beef and mining assets in the region.
The federal governments' adoption of the Internet of Things (IoT) as part of the Turnbull government's "Smart Cities Deal" (Townsville sold out by Turnbull Smart City Deal) signed in Dec 2016 will bring massive challenges for existing and start-up manufacturers and wholesalers in a regional market like Townsville.
Corporate and consumer concerns about privacy and data security is a developing public issue as the commercial competitiveness of large multi-national corporations takes aggressive steps to mine Australia's personal data.
 |
| Herron Todd White Property Update Nov 2016 |
The growth of online spending by Australian consumers has increased nationally from $11.7 billion in 2012 to an estimated $20.1 billion in 2016, nearly a 100 percent increase in just 4 years. $11.7 billion represented 5.3 percent of all retail spending in Australia. 72 percent of the $11.7 billion online sales occurred through domestic retailers. Just in the last 12 months to June 2016, online spending by Australians has increased by 13.5 percent.
 |
| NAB Online Retail Sales Index June 2016 |
The office vacancy rate has continued to increase on average over the past 6 years. A grade office space has been an exception as government and management related service operations have moved on this quality space in the city.
 |
| Herron Todd White Property Update Nov 2016 |
However, due to the increasing demand for multi-channel warehouse space likely classified in Townsville as "satellite capacity", strategically located industrial property could yield better returns than even office and retail space.
 |
| Herron Todd White Property Update Nov 2016 |
As the sharing economy proliferates further, and global distribution and logistics become cheaper, Townsville's future is unlikely to see an increase in demand beyond domestic thresholds for industrial floor space.
Competition with Cairns is expected to heat up in the growing global distribution and logistics market because of its geographic location, existing international transportation links, greater top-up tourism capacity and its growth momentum.
Cairns is threatening Townsville's claim as the Capital of North Queensland.
Townsville property investors are likely to continue treading with caution in the industrial, retail and office markets as the new commerce channels settle where the cash flows.
Cairns is threatening Townsville's claim as the Capital of North Queensland.
The evolving dependence of Townsville's economy on political and government funding presents a significant residual risk to Townsville's economic recovery and sustainability.
Therefore, its economy is susceptible to "strike out" within free market conditions in the absence of a globally relevant industrial and technology sector. As a consequence, the capital and yield opportunities for investors in all sectors of the market will continue with uncertainty.
Therefore, its economy is susceptible to "strike out" within free market conditions in the absence of a globally relevant industrial and technology sector. As a consequence, the capital and yield opportunities for investors in all sectors of the market will continue with uncertainty.
References:
Herron Todd White Property Market Update November 2016
National Australia Bank Online Retail Sales Index June 2016
Australian Treasury Small Business Key Statistics and Analysis Report 2012
Henderson Global Research
Townsville City Council
Advance Queensland
Office of the Prime Minister of Australia
Rapid Realty Australia
No comments:
Post a Comment