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Australia’s apartment building boom will make Amazon’s entry into Australia more difficult than first thought, according to a report detailing the requirements of the global retail giant.
It may be difficult for Amazon to find the right industrial properties because they are being taken by residential developers, the report by Colliers International says.
The Amazon Network report looked at the global property portfolio of the retailer, which totals more than 13.1 million square metres of space across 14 countries.
The company’s largest property exposure, some 8.5 million square metres, is in the US, followed by Germany on 896,500 square metres.
Amazon’s property around the globe ranked by number of facilities.
With Australia now officially in its sights, listed real estate groups such as Dexus, Charter Hall Group, Frasers and Goodman are racing to offer locations from Brisbane to Melbourne to the online retail giant.
But the size requirements of Amazon and the locations it needs are expected to come at a cost because of the huge prices residential developers are paying for key sites.
Colliers International’s managing director for industrial property Malcolm Tyson said of the five main property facility types that Amazon operates out of, the 6000-square-metre “prime now hubs” – which allow goods to be delivered to consumers within one to two hours – will be the most difficult and costly component in Amazon’s property play.
“We frequently get businesses coming to us looking for the 3000 to 4000-square-metre facilities in the inner ring areas of Sydney but it is very difficult to get them because they are purchased and flipped over for alternative uses such as apartments,” Mr Tyson said.
Competition to buy
Amazon.com’s fulfillment centres like this one in DuPont, Washington, US, are coming to Australia. Photo: AP
“First of all it is going to be very difficult to find and then they will face competition to buy,” he said.
Goodman Group, for example, has sold almost $1 billion worth of its old industrial properties that have been rezoned into residential sites.
All throughout south Sydney – which would be a prime position for Amazon’s more nimble distribution centres – industrial properties have been snapped up by foreign and local developers to build thousands of apartments.
The Colliers International report authored by Sass J-Baleh highlights how critical it is for Amazon to have the more nimble distribution centres in order to have an efficient supply chain network.
The five types of facilities include “fulfillment centres”, which are the massive sorting centres of up 100,000 square metres with robots called Kivas. These facilities may be easier for Amazon to acquire because they can be built on land away from capital city centres where there is comparatively cheaper land.
Such a centre has already been mooted to be a purpose-built warehouse at the Goodman Group’s $50 million Oakdale Industrial Estate
The second type of facility is “fresh food distribution centres”, which average in size at about 40,000 square metres across the 14 countries Amazon operates in. Then there are the “regional sortation” centres occupying an average of 30,000 square metres. “Delivery stations,” part of the last leg of the chain, typically need between 6000 square metres and 10,000 square metres and will use multiple courier services to send products to customers.
The “prime now hubs” are the final smaller facilities that stock a limited line of products that are high in demand and located in dense population areas.
Ms J-Baleh said the denser the population, the more difficult it might be for Amazon to find what it needs.