This article is from the Australian Property Journal archive
THIRD-PARTY logistics accounted the lion share of industrial leasing activity in Australia and across Asia Pacific, leading to further evolution such as fourth-party logistics (4PL) and reverse logistics which will drive even more demand for modern warehouses.
CBRE’s report found the growth of e-commerce and the reliance on 3PL have had a significant impact on the industrial real estate market.
In Australia, 3PL took up almost 60% of space in 2023, significant increase from almost 40% in 2022. That is highest figure in Asia Pacific, and exceed the figures recorded in China and India, with around 50% and 45% respectively.
Across Asia Pacific, 3PL accounted for 30-40% of leasing activity last year despite leasing momentum moderating from the pandemic peak.
Meanwhile in the United States, 3PL leasing activity accounted for more than 30% of bulk transactions (over 100,000 sq ft) since the pandemic’s onset due to significantly higher e-commerce, requiring corresponding warehouse space. Although economic uncertainty has slowed short-term 3PL growth, the long-term outlook is strong.
Europe saw 3PL become a larger part of logistics leasing demand, increasing by 10% since 2019. During this time, for XXL facilities (warehouses over 50,000 sqm or 580,000 sq ft), final occupiers have increasingly preferred to control the lease themselves and contract a 3PL to operate the warehouse.
CBRE said the pandemic spurred a sharp rise in e-commerce, causing global supply chain vulnerabilities that underscored the need for greater resiliency.
“3PLs have been highly effective, now dominating demand for industrial & logistics space, impacting real estate fundamentals and warehouse building design, and leading to further industry evolution such as fourth-party logistics (4PL) and reverse logistics,” the report said.
CBRE expects reverse logistics to grow, due to the high volume of returned items due to e-commerce.
“E-commerce companies contract a 3PL for reverse logistics largely due to the time and handling costs. 3PLs can also manage the item disposition process.
Finally CBRE said 4PL will be the new frontier, coupling with artificial intelligence (AI), it will drive even more modern warehouse space demand.
“The rise of 4PL providers is a growing supply chain industry trend. 4PLs leverage advanced technology such as artificial intelligence (AI), big data analytics and blockchain to optimize entire supply chain ecosystems.
“As occupiers adopt this new technology, 4PLs will become more attractive as they act as a central hub that provides end-to-end visibility. This technological innovation is poised to revolutionise the logistics landscape and distribution centre requirements,”
