Warehouses to go automated and up

5:19 PM Tuesday March 13, 2018 True Commercial

Experts say warehouses will dwarf this present-day high stud design. Photo / Supplied

Warehouse automation technologies and multi-storey warehouse designs could help to ease pressure on Auckland’s tight industrial market in the long term, says Greg Goldfinch, national director of industrial for Colliers International.

Goldfinch says businesses are having to adapt to the reality that Auckland’s record low industrial vacancy rates are here to stay.

The company’s most recent survey found Auckland’s prime industrial vacancy rate is 1.3 per cent, while the secondary rate is 2.3 per cent, making for an overall vacancy rate of 2 per cent.

“In established overseas markets, tenants and developers have responded to similarly low vacancy rates by embracing new technologies and different types of warehouses,” Goldfinch says.

“One solution is to adopt warehouse automation technologies that introduce greater efficiencies. This allows businesses to remain where they are, rather than having to find a larger space elsewhere.

“Another solution is to occupy a multi-storey warehouse, which can greatly increase the amount of available floorspace on a given site.

“This can be a useful option for businesses that need to remain close to their urban customer bases, particularly in city fringe areas where industrial vacancy rates can be extremely tight.”

Goldfinch says Auckland is unlikely to see these developments in the short term, given the availability of industrial development land in areas such as Wiri, Silverdale, Auckland’s northwest, Drury and Pokeno.

Ongoing industrial development within Hamilton and Tauranga — the other two hubs of the North Island’s fast-growing Golden Triangle — is also helping to ease supply pressures.

But as industrial development land is absorbed over the longer term, businesses will start looking at innovative solutions in order to remain close to their customer bases.

Goldfinch says moving to an automated warehouse model has many well-documented advantages.

“It allows greater control over stock, can reduce energy and labour costs, and can enable greater understanding of exactly what is occurring in the business.”

He says the arrival of multi-storey warehousing here might be in the future, but it’s already starting to take place across the Tasman where large-scale automation is being adopted in the Australian industrial market, particularly among logistics and e-commerce businesses.

One good example is Australian online retailer Catch of the Day, which invested A$20 million in a Norwegian-designed warehouse automation system called AutoStore.

“The system uses a computerised network of robots to access bins that are stacked vertically next to one another, allowing for four times the inventory capacity of traditional aisles in the same warehouse,” Goldfinch says.

“While costly to install, the system has allowed Catch of the Day to increase its capacity from 6000 orders a day to more than 25,000 orders a day, without increasing its warehouse’s footprint.”

“Increasing land prices, the rise of e-commerce, and the declining availability of industrial space have all contributed to the emergence of multi-storey warehouses in city fringe locations across Australia,” Goldfinch says.

Multi-storey warehouses are condensed facilities, usually with lower ceiling heights, that appear more compact and vertically aligned than typical warehouses.

As the name implies, they comprise two or more storeys of usable storage.

The facilities are usually occupied by tenants requiring fast distribution to their urban customer bases. As a result, they are usually located in strategic city fringe locations close to the CBD.

Colliers capital markets director Blair Peterken, who has extensive experience in the South Sydney industrial market, says multi-storey warehouses are becoming increasingly popular there.

“We’ve seen strong uptake of these smaller industrial units, which are often co-located with ancillary office space, in the South Sydney sub-market,” he says.

“As e-commerce continues to play more of a role in the New Zealand market, we can expect to see similar developments here.”