Sydney Airport expands DHL Express partnership as online retail boosts demand

Sydney Airport has cemented its logistics footprint after inking a new long-term strategic partnership with DHL Express to cater for the increasing arrivals of e-commerce freight.

Located at the domestic airport, the deal fund to 2029 and will see the airport grow its dedicated freight hub in the coming years. The extended lease will allow DHL Express to upgrade the internal operations of the 12,000 square metre hub.

Sydney Airport has more than 90 tenants occupying 98 per cent of the 880,000 square metres  allocated to freight handling at the airport. Other tenants include Qantas Freight, Virgin, Toll, Menzies and Dnata.

DHL Express has extended its lease with Sydney Airport to cater for the growth in online shopping freight.

Last year, Australians spent a total of $28.6 billion on online shopping, which now accounts for about 9 per cent of Australia’s total retail sale.

Analytical group Statista, predicts that by the end of this year Australian online businesses will see a 15.1 per cent growth in revenue, with more than 20 million people using the internet to shop.

Vanessa Orth, Sydney Airport’s chief commercial officer, said the new agreement with DHL Express "reaffirms our strong relationship, with 44 per cent of all DHL freight in the Oceania region coming through Sydney Airport".

"This agreement is an endorsement of Sydney Airport’s unique freight proposition and future growth potential; we are on the doorstep of Australia’s most important business district and through the Sydney Gateway project will be directly connected to Sydney’s motorway network," Ms Orth said.

"The fact that we are Australia’s busiest passenger airport and forecasting to double our passenger traffic in the next 20 years is also important, as about 80 per cent of freight is carried in the belly of commercial aircraft."

Ms Orth said driving the demand is the continued global appetite for e-commerce and distribution facilities located closer to the end-customer as service level delivery agreements become tighter and more competitive.

Greg Goodman, chief executive of Goodman Group, the country's biggest industrial property landlord said the strong demand from e-commerce, data centre users, change of use and limited supply should continue to support occupancy and rental growth in the medium term.

The latest Knight Frank Sydney Industrial Market Overview February 2020 reported investment volumes reached $2.17 billion in 2019, up from $1.7 billion in 2018 and $1.28 billion in 2017.

Buoyed by ongoing demand from logistics and retail trade sectors, industrial development also continues to reach record levels, with a decade high of circa 677,000 sq m delivered in 2019, which is expected to be eclipsed by the end of 2020.

Knight Frank senior analyst Marco Mascitelli said the industrial property sector was becoming one of the most sought after asset classes, with demand expected to stay strong, particularly in core locations.

"The level of investment in the sector and leasing take-up of industrial floor space, relative to the previous three years, is trending above average," Mr Mascitelli said.

Sydney Airport releases its half-year results on Thursday.

Source: Read Full Article