A year ago, warehouses were being snapped up by businesses racing to keep up with the massive surge in online retail triggered by COVID lockdowns. The expectation was that as the pandemic eased, so would the demand for industrial real estate. But that never happened.

In JLL’s latest industrial Perspective podcast, host Rebecca Kent interviews newly appointed Head of Supply Chain and Logistics Australia Allan Frydman, and Matthew Lee Senior Director - Industrial Occupier Services Australia. They share their insights about how businesses are navigating the shortage of warehouses, while trying to keep up with consistently high levels of ecommerce and persistent supply chain challenges.

“We came off the 2020 COVID-19 year with the expectation of a slowdown, but we had a unique situation whereby enquiry volumes sped up, and the only thing that slowed down was the delivery of new stock into the market,” Lee says. “We've got arguably the strongest demand characteristics the market has seen for a long time and a significant shortage of supply.

“The cross section of the market at the moment is really interesting,” Lee adds. “Off the back of the pandemic, the need for food and pharmaceuticals has been expansive. People's ability to generate data has continued to grow exponentially, so we're also doing a lot of data centre work.”

Business are holding record volumes of inventory, yet their ‘out of stocks’ are also significant, Frydman says.

“Our clients are just trying to get their hands on whatever they can get so they can continue to build up their safety stock,” Frydman says. “The just-in-time philosophy that people were working with before has really been put to the test and people are realising it's not great having a two-week streamlined manufacturing window when we can see how disruption breaks our supply network.

Changing work patterns are also having a major effect on warehouse demand and operations, Frydman says.

“At first we saw a rush for the home office and people buying computers, webcams, monitors, tables, office chairs and things like that, yet now we’re seeing more lasting changes in the way we work,” he says. “There's still a lot going on at home and so with our customers that deal with home improvements, whether it's furniture, tiling, appliances, or anything, their sales are skyrocketing and they're coming to us saying ‘give me more space, I need more inventory’.”

To listen to Episode 21: How to navigate the industrial supply crunch visit www.jll.com.au/en/campaign/perspectives-podcast/ep-21-how-to-navigate-th...

Check JLL’s Trends & Insights for upcoming industrial and logistics podcast episodes focusing on sustainability, crises and disruption, and labour.