As global demand for temperature-controlled facilities heats up, the lasting implications will see leaders in the Australian industrial sector focus on strategies for sites that focus on purpose, people and the planet.
After experiencing a strong start to 2021, securing major deals with DHL Supply Chain and the ASX-listed BWX, ESR Australia estimates that 80 per cent of its current enquiry is for temperature-controlled facilities.
Both deals were for long-term leases and highly customised facilities, demonstrating the expectation that the robust consumer demand for perishable and sensitive products, which spiked in the wake of Covid-19, will be sustained for years to come.
ESR Australia’s partnership with DHL will see the development of an $83-million pharmaceutical distribution facility at ESR Bringelly Road Business Hub in western Sydney.
The facility spans 36,000sq m gross floor area, which DHL Supply Chain will lease for 10 years.
The BWX contract is also for 10 years, for an 18,000sq m bespoke facility in ESR’s Clayton Business Hub in Melbourne.
The temperature-controlled facility will allow BWX to house its manufacturing facilities and support office under one roof and significantly accelerate its capacity to bringing new natural beauty products from brands including Sukin and Nourished Life to market.
ESR Australia’s CEO Phil Pearce said that beyond the practicalities of storage and distribution, another critical factor driving the demand for temperature-controlled facilities was the comfort of the people working within these warehouses.
“Gone are the days of thinking industrial facilities as unsophisticated sheds that don’t require a lot of amenity,” Pearce said.
“In many cases, facilities house vast amounts of capital—from the storage of high-value product to the vastly specialised equipment and technology that requires operation by highly qualified staff—as such temperate control has become an important element for protecting assets.
“Our customers want to attract the best people for their service offering, and as such, they have strong policies aligned to employee wellness and prioritise creating an environment that enables the greatest levels of productivity.
“Amenity in industrial space is starting to catch up to the office sector, and we’re working closely with customers to explore incorporating worker recreational areas, landscaping, outdoor breakout space within the specific context of their business.
“From a commercial perspective, temperature control also makes sense in light of Employee Bargaining Agreements where employees must cease work when the temperature reaches 35 degrees, which is occurring more often as a result of climate change.”
While the power requirements for temperature-controlled facilities are approximately 80 per cent higher, ESR Australia draws on the ESR Group's expertise, which has a reputation for embracing renewable energy to deliver highly sustainable and commercially competitive facilities.
“We are looking to offset this additional requirement with our solar offer and working closely with customers on these schemes.
Planning for future storage of on site batteries is part of the requirements going forward,” Pearce said.
As the largest Asia-Pacific logistics real estate group by both gross floor area (GFA) and by the value of the assets, ESR Group has a vast commercial imperative to integrate Environmental, Social and Governance (ESG) considerations across the logistics real estate development cycle of its activities, given the growing appetite of investors for transparency and accountability in this space.
The focus on environmental sustainability is evident at the Bringelly Road and Clayton Business Hub ventures, targeting a 5-Star Green Star rating.
Pearce said that ESR Australia would continue to work with customers to further the local sustainability agenda through green design initiatives, including rainwater harvesting and smart building management systems.
“The argument is increasingly in favour of incorporating sustainable initiatives such as solar from the outset, as it means our customers will have the benefit of clean power and be in a position of earning money back well before the term of the lease,” he said.
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