Sass J-Baleh Head of Industrial & Logistics Research Australia and Director NSW Research shares her insights into budget 2021 and its Impact on the Australian Industrial and Logistics sector.

Sass J-Baleh told The INDUSTRIALIST, “particular relevance is the support to onshore manufacturing in the pharmaceutical sector and life sciences which is ultimately to build sovereign capability (future proofing society).  Currently all countries are trying to have vaccination capability and therefore not be reliant on other countries/regions to support them.”

The need to solidify Australia’s end-to-end supply chain for critical products through additional expenditure (+AUD 2 billion) in the Modern Manufacturing Strategy. In addition are the incentive measures to support medical and biotech companies to remain in Australia in order to develop onshore manufacturing capabilities and thus create sovereign capability. This is a direct investment injection in the critical goods industries. In doing so the expansion of occupiers within the pharmaceutical sector, as well as food and beverage sector, will continue (perhaps even now accelerate the growth). This, in turn, will place upward pressure on the demand for industrial floorspace.   

Assumed opening of international borders will support population growth. Population growth is one of the key drivers of demand for industrial & logistics space.   When international borders re-open, Australia is expected to be an attractive destination for offshore migrants and will return to long-term population growth rates. Under this scenario, it would equate to incremental net demand of 5 million sqm of industrial & logistics space by 2025. 

Income Tax cuts for low- and middle-income earners will boost consumption and support retail expenditure, in turn, fuelling movement of goods.  Greater retail consumption will contribute to continued growth in consumer staples (food and medical related products) and thus occupiers in these sectors, as well as discretionary related goods (particularly via online sale distribution channels). Increasing the activity in the movement of goods will create further demand for transport, warehouse and logistics service providers. 

Infrastructure spend remains at record levels and will continue to improve external efficiencies for occupiers, particularly those operating in the transport and logistics sector.  A large pipeline of infrastructure projects committed across Australia is supported by AUD 110 billion investment over the next decade. This includes transport infrastructure investment in roads, rail, freight terminals, and airports. New transport infrastructure will continue to support the logistics sector by boosting efficiency of operations, including freight throughput, and unlock greater significant and strategic industrial locations, and in turn, demand for industrial space.