Land under-supply hurts industrial plans

INDUSTRY is calling for a short-term boost to industrial land supply, as the Property Council believes Perth’s supply of developed industrial lots is just a fraction of the figures reported by the state government.

The government’s Industrial Land Strategy was released for public comment in November last year as part of its response to a shortfall in industrial land supply.

According to the document, the total area of industrial zoned land in Perth was 13,798 hectares (in December 2008).

The available supply of developed industrial land is 9,378ha, of which 8,142ha is occupied and 1,136ha vacant, leaving more than 4,000ha undeveloped.

Property Council of Australia WA executive director, Joe Lenzo, who is coordinating industry’s response to the lands strategy, said there was about 1,000ha less industrial land available than reported in the strategy, mainly because of environmental restrictions and lack of infrastructure.

“It’s all very well to draw a purple patch on the map and say ‘here’s some industrial land’, but its got to go through the whole approvals process,” Mr Lenzo told WA Business News.

“All the easy land is gone, so new developments in industrial land, and in other things, are harder.

“It’s the harder land that’s got groundwater problems, environmental issues, all of those things have to be taken into consideration, and at the moment the strategy doesn’t go anywhere near that sort of certainty.

“It just kind of bullocks out areas, and says ‘yep there’s a number of hectares here and there’, but they’re not ready. It has to go through the whole approvals system, so we wouldn’t classify them as industrial land ready to be utilised.”

According to Mr Lenzo, significant inbound investment is bypassing Western Australia because of the lack of ready-to-develop industrial land.

Mr Lenzo said a lack of forward planning was one of the main contributing factors to the scarcity.

“It’s been 10 years or so that we haven’t had any real concentrated planning and monitoring of the zoning of industrial land,” he said.

“Over the last eight or nine years that scarcity hasn’t been highlighted because we had Westralia Airports Corporation opening up big tracts of their land for industrial development, and the demand was satisfied by the airports corporation.

“But they took a decision probably 12 months ago that said they have to concentrate on developing the airport, and they’re no longer in the industrial land development phase, they’ve virtually shut the door on that for the next few years and suddenly that sort of valve that we had is gone.”

LandCorp has taken steps to ensure the Hope Valley Latitude 32 industrial precinct satisfies the long-term demands of larger tenants, with last week’s announcement it had decided on a location for an intermodal freight terminal in the precinct.

ABN Group manager for developments, Jason Willoughby, said it would be difficult to attract larger industrial tenants to Latitude 32 in the short term because potential users of industrial land were holding out for traditional areas of Kewdale-Welshpool.

ABN Group is currently developing industrial lands at Forrestdale, Maddington and Balcatta.

“People won’t go there [to Latitude 32] and pay developer contributions and wait 10 years to build up $250 million to pay for this intermodal facility to be built, so there’s a sort of a catch-22 situation, with what’s going on in the market,” Mr Willoughby said.

“Other than Canning Vale there’s not a lot really elsewhere for the bigger players in the new outer areas at this stage, because people are still holding out to try and get into those areas closer to the infrastructure.”

Goodman International WA general manager Travis Hardman said the road and rail infrastructure situated at Kewdale-Welshpool had lifted demand for industrial lots in surrounding areas.

Goodman International is currently developing a 35ha parcel of Hazelmere land for industrial uses, recently announcing it had signed up Toll IPEC as a major tenant, and is aiming for a practical completion of a 10,638 square metre trucking facility for MTU Detroit Diesel later this month.

“You have to look at it in two stages, short term and long term,” Mr Hardman said.

“The short-term requirements, your large users, need to be around the Kewdale-Welshpool area or the surrounding suburbs because it has the intermodal, the airport, strong road infrastructure.

“From a long-term point of view they’re certainly talking about the Latitude 32, Hope Valley – Wattleup area.

“(With an intermodal facility) it could be a great long-term solution for industrial land supply, but the focus certainly needs to be addressing the short term.”