Inside Goodman’s first multistorey warehouse in Australia

The construction of multistorey warehouses in Sydney has gained pace as developers try to capitalise on a surge in industrial land values, record low vacancy rates and forecasts of further strong rental growth. CBRE has forecast that 15 per cent of all new Sydney warehousing stock completed between now and 2027 will be multistorey.

“Around four million people can be reached within 45 minutes’ drive from the warehouse, so it makes sense to build vertically to maximise site space,” Goodman development general manager Ben McGilp said.

“With south Sydney rents being so high, anybody who wants to be in this location has a strategic need to be here. It’s not a choice so much as it’s a requirement to have a facility that is close to the city.”

Goodman’s new warehouse, located in the inner-city suburb of Alexandria, has 16,000 square metres of lettable space across two levels. Both floors support truck thoroughfare to meet the needs of customers, who primarily use south Sydney warehouses as last-mile logistics and storage hubs.

By designing the warehouse in this way, the second floor has effectively the same amount of space as the first floor. This design approach also means customers will not be scared of using a multistorey warehouse, as “customers connect with truck access”.

“What we did here was build something that the customer can connect with. It’s similiar enough to other single-level warehouses in Sydney that it isn’t scaring them away from a complexity point of view,” Mr McGilp said.

Goodman’s newly completed warehouse has received strong demand already – 40 per cent of its space has been leased by Japanese food supplier Daiwa Food and logistics company Nippon Express.

The remaining 60 per cent was expected to be leased in the coming months, Mr McGilp said.

Despite the business case of building higher with warehouse facilities stacking up, the height of most, if not all, of these upcoming multistorey warehouses near the Sydney CBD is expected to be capped at two storeys, Goodman founder and chief executive Greg Goodman told The Australian Financial Review.

“In the current environment, two storeys make sense in south Sydney, mainly due to site utilisation and efficiency,” he said.

Mr Goodman is no stranger to multistorey warehouses, having built almost 50 of them over the past 11 years. Among them is the 22-storey Goodman Interlink in Hong Kong, which is the world’s tallest logistics building.

But unlike the Hong Kong and Tokyo markets, where multistorey warehouses taller than two levels are the norm, land constraints make that a difficult feat to achieve in Sydney, Mr McGilp said.

This is because more than three hectares of land is required to build a warehouse taller than two storeys. The process to get a piece of land that large is easier overseas, as these jurisdictions provide newly released land for such projects.