In a recent revelation, a comprehensive report by Oxford Economics Australia, commissioned by the Property Council of Australia, has brought to light the pivotal role played by Australia’s industrial assets, commonly known as ‘big sheds’. The study uncovered a staggering $1.2 trillion worth of goods flowing through these key properties annually, marking a crucial aspect of the nation’s economic landscape.
The report, delving into the financial dynamics, estimates that a significant 38 per cent of household consumption in the fiscal year 2022, totalling an impressive $423 billion, can be attributed to goods passing through industrial assets. These include warehouses, manufacturing facilities, and distribution centres, collectively forming the backbone of Australia’s industrial infrastructure. Strong demand from industrial occupiers nationally who require larger real estate solutions indicates that this figure is likely to still be climbing.
Further breaking down the figures, approximately 44 per cent of the value of goods traversing these industrial assets supports business activities, while around 34 per cent contributes directly to household consumption. This underscores the indispensable role these ‘big sheds’ play in both supporting businesses and catering to the needs of individual consumers.
Unfortunately, the rapid increase in demand for industrial land has quickly taken up the existing land supply. This has led to an increase in industrial land prices nationally. This is exacerbated by a very limited supply of ‘shovel-ready’ industrial development land nationally. Future industrial land supply is somewhat constrained due to the availability of infrastructure and services and planning and zoning constraints, meaning that a quick solution to this supply problem is challenging.
Collaboration between states, local council and the private sector is required to expedite supply to meet market demand or we will continue to see land prices continue to rise, but will also see constraints in increasing the flow of goods through industrial facilities that are required to continue to support population growth.
It’s crucial to note that the report primarily focused on quantifying the value of goods flowing through industrial assets. This differs conceptually from measuring economic activity or value addition from the sector. The distinction lies in the fact that GDP represents the total value of all final goods and services production, whereas industrial assets, including both final and intermediate goods, offer a more comprehensive insight into the economic landscape.