Is near-city industrial development responding to the needs of an expanding e-commerce sector?

E-commerce will represent 12% of all retail sales by 2020, according to research conducted by IBISWorld. The same research indicates that the e-commerce sector is forecast to grow by 9.4% per annum in Australia over the next 5 years. Changes in consumer preferences and the unprecedented rate at which technology is evolving are driving demand for a different approach to near city industrial development. It is my view that Developers and cities in partnership need to provide the following:

More extensive near city industrial land zoning;
Increased amenity and facilities within near-city zoned industrial areas; and
Stronger infrastructure to facilitate “last-mile” logistics.

Near City Industrial Land Zoning

Near city and inner city land prices in Australia’s capital cities have risen by up to 85% over the last 5 years. This has meant that most of the industrial development on the city fringe has had to make way for commercial offices and high density residential buildings. Furthermore, industrial development has become unfeasible because of high land prices in near city locations.

In order for cities to ensure commerce thrives and – in particular – that it is easy for consumers to acquire goods and services (drivers of GDP[GW3] ), they must make land available to facilitate these transactions. Cities must have a goal to protect land already zone for industrial business, and where possible, to release more land for this purpose. It is the responsibility of government to ensure that a city has a healthy mix of commercial activity in and around densely populated areas. This is particularly important in places where consumer demand is for greater urbanisation.

Stronger Infrastructure

In Australian capital cities, population growth and urbanisation has outpaced infrastructure development. Our current industrial areas are isolated and disconnected. Roadways are insufficient, there is a lack of public transport and safe routes for active travel.

“Last mile” distribution is defined as the final segment of a journey that an item takes before it is delivered to the end consumer. This concept has become increasingly important to e-commerce retailers wanting to satisfy consumer’s preference for swift delivery. Significant infrastructure upgrades to rail, roads and bike ways are required to facilitate efficient last mile distribution, which will allow e-commerce to flourish and contribute meaningfully to economic growth and employment.

Industrial Buildings with Greater Amenity

When protecting near city land for industrial development, cities need to allow for and in some places expect Developers to create greater amenity within new and re-purposed buildings. In a practical sense, I believe this could mean the following:

Greater office-to-warehouse ratios will allow businesses to collocate their e-commerce, administrative and business development functions;
Near city office and warehouse buildings need end-of-trip facilities, break out spaces and other employee built form amenities that attract and keep employees;
Development needs to occur around public transport, food and beverage, retail and household services; and
Car parking ratios for co-located office and warehouse accommodation needs to be reduced in near city areas as more employees rely on public transport or active travel to get to work.

If our city economies are to continue to grow, advance and meet the needs of consumers, they must be adequately set up to respond to the ever growing role of e-commerce as business platform. The ideas outlined above are only the start of a greater conversation required on this key issue.

I invite you to share your thoughts on the principles outlined above with me via the comments section below.