7 Things to consider when choosing a warehouse location

When it comes to optimising your supply chain and logistics operation, selecting the right warehouse location is a crucial decision. The right location empowers businesses with effective storage and distribution capabilities and provides an upper hand in a competitive market.

A major factor in an efficient supply chain management system is the proximity of the warehouse to a number of key components. Here are 7 important ones we've identified as critical to an optimised supply chain

Worker in warehouse

1- Proximity to Major Markets

One of the primary considerations is the proximity of the warehouse to major markets and distribution centres. Australia's major cities, such as Sydney, Melbourne, Brisbane, Perth, and Adelaide, serve as economic hubs with significant consumer populations. Opting for a warehouse location near these urban centres can help minimise transportation costs and reduce lead times, ensuring the timely delivery of goods to customers.
Understanding the primary purpose of the warehouse and the type of product to be stored in it are also key considerations for location and proximity. If the primary purpose of the warehouse is to pick, pack and despatch customer orders, proximity to urban centres and residential areas is paramount. If the warehouse will primarily be used for longer-term storage or to store and deliver bulk orders to other warehouses, then urban centre proximity may be less critical and rental price savings could be had by being further away.

2- Transport Infrastructure

Australia's vast land area necessitates a well-developed transport infrastructure network. Assess the availability and quality of road, rail, and air transport connections near potential warehouse sites. Proximity to major freeways, airports, and seaports can streamline the movement of goods, facilitate efficient supply chain management, and reduce transportation costs.

3 - Labor Availability and Costs

Consider the availability of skilled labour in the area you are considering for your warehouse. Evaluate the local labour market, including the workforce's size, skill sets, and wage rates. Balancing labour costs with workforce capabilities is essential to maintain operational efficiency and control labour-related expenses.

4 - Regulatory Environment

Compliance with local regulations and laws is crucial when operating a warehouse in Australia. Familiarise yourself with zoning regulations, environmental requirements, building codes, and safety standards that may impact warehouse operations. Additionally, consider any specific industry regulations that may apply to your business. Ensuring legal compliance from the outset will prevent costly disruptions or penalties down the line.

5 - Proximity to Suppliers

If your business relies on a robust supply chain, it's important to consider the proximity of potential warehouse locations to your suppliers. Having suppliers in close proximity can reduce lead times, enable just-in-time inventory management, and minimise transportation costs associated with inbound shipments. Assess the availability of reliable suppliers in the area and the potential for establishing strong partnerships.

6 - Real Estate Costs

Real estate costs can significantly impact your overall warehousing expenses. Evaluate the cost of acquiring or leasing warehouse space in different regions of Australia. Factors such as land prices, lease rates, property taxes, and utility costs should be carefully analysed. Balancing real estate costs with the other factors mentioned here is crucial for maintaining profitability and optimising your supply chain.

7 - Resilience and Risk Management

Consider the potential risks and vulnerabilities associated with a specific warehouse location. Australia is prone to various natural disasters, including cyclones, floods, and bushfires. Assess the site's exposure to these risks and the availability of contingency plans, insurance options, and infrastructure resilience. It's important to have strategies in place to mitigate and recover from potential disruptions that may impact your warehouse operations.

Australian locations

Why does the location of a warehouse for a business in Australia matter?

The importance of location for Australian warehouses cannot be overstated. Australia's vast size, diverse geography, and dispersed population present unique challenges and opportunities for businesses operating within the country.

Optimal warehouse location plays a pivotal role in achieving efficient supply chain management, reducing transportation costs, and meeting customer demand in a timely manner.

By strategically selecting a warehouse location in Australia, businesses can gain a competitive edge, enhance customer satisfaction, and drive overall success in this dynamic market.

Warehouse rent: a roundup of the current scenario

According to JLL's Australian Logistics and Industrial Market overview for Q1 2023, industrial rental prices are continuing to strengthen.

"Despite gross take-up volumes slowing over Q1 2023, the ongoing mismatch between supply and demand continues to drive strong industrial rental growth in many precincts. Eleven cash rate increases over the past 12 months are yet to impact consumer spending. However, future order volumes are decreasing, indicative of a slowing retail trade environment. More importantly, Average rents continued to increase, supported by a persistent tight leasing market.

While occupier activity is slowing from the strong levels recorded in the early COVID19 period, businesses seeking modern warehouse space are still presented with the challenge of finding suitable space. With very limited leasing options nationally, tenants are still willing to pay higher rents to satisfy spatial requirements. As a result, national prime average weighted net face rents increased by 4.5% to AUD 165 per sqm p.a. This increased annual growth to 24.9%. This annual growth was again a record high."

For an in-depth insight, get your copy of the JLL report here.

The lack of available industrial space for lease, coupled with rising demand from a diverse range of tenants, has contributed to the outperformance of industrial assets over the past year.

uTenant's warehousing expert Chris Spiteri does note that industrial space is slowly starting to open up in Melbourne and Sydney - read more about the latest market trends in our 3PL Market roundup.

How uTenant is here to help you find the right warehouse.

Selecting the right warehouse location in Australia requires a comprehensive analysis of several key factors. When finding the ideal warehouse location in Australia, uTenant is your trusted partner.

With its extensive network of warehouse listings and deep industry expertise, uTenant provides businesses with a comprehensive platform and network to connect with property owners and make informed decisions.

Whether you are seeking warehouse space in Sydney, Melbourne, Brisbane, Perth, or Adelaide, or even New Zealand, uTenant offers a user-friendly platform that simplifies the search process and facilitates efficient negotiations. Our experts here are ready to assist you in finding the perfect warehouse location that aligns with your business goals.

Don't miss out on the opportunity to optimise your supply chain operations and establish a strong presence in the Australian market with uTenant as your go-to resource for warehouse location solutions.

Reach out to one of us at uTenant today to explore our extensive database of warehouse listings, tailored to meet your specific requirements.