Australia will need an additional 1,800,000 sqm of industrial and logistics space over the next five years to accommodate the forecast growth of online shopping. 

According to CBRE, online sales rose from representing 9% of total retail spending in 2019 to 14.3% in July 2022, and are forecast to reach 17% by 2026. 

The rising demand for warehouse space comes as Australia holds the lowest industrial vacancy rate in the world at 0.8%, and a pipeline that represents just 2% of its current supply. 

Australian consumers’ total spending online rose from $30 billion in 2019 to $53 billion last year, and is projected to hit $78 billion by 2026.  

CBRE applied a formula of 70,000 sqm being required to facilitate each additional $1 billion of sales to forecast that an extra 1,800,000 sqm would be needed support the sector.  

“E-commerce has grown significantly in the past five years, and that continued adoption requires large amounts of logistics space,” CBRE’s Head of Industrial & Logistics Research Sass J-Baleh said.  

“In the case of Australia, the forecast growth equates to needing an additional 1.8 million sqm of space, amid what’s already a chronic shortage of supply and a relatively-limited pipeline of new stock. 

“It’s set to fuel rental growth in over the coming years, as occupiers compete for supply, but more broadly there is a question of how to facilitate this growing requirement, including whether it’s possible to unlock alternative space or intensify the use of available space.”  

The online grocery sector is set to be one of the biggest drivers over the coming years, with revenue forecast to total $17 billion in FY2027, almost doubling the FY2022 figure.  

“Markets with more of the fundamentals in place experienced higher peaks during the pandemic, only for the rate to drop after restrictions eased, whereas Australia’s growth has been sustained,” J-Baleh said. 

“Online grocery shopping is an example of changing consumer behaviour, and it accounted for 20% of Australia’s total online retail spend in 2021.  

“However, that’s still only 3% of the total grocery spend in the country, highlighting that there’s still significant scope for growth.”