Infrastructure

Earlier this month, the Federal Government budgeted $1.8 billion for major road and rail infrastructure projects in South Australia. The most important project funding from a commercial property standpoint is the allocation of funds towards the now fully-funded Regency Road to Pym Street upgrade and potentially the completion of the South Road upgrade (most likely the stretch between Anzac Highway and Torrens Road).

Easy connectivity to freight hubs and major road networks is, almost always, the most important criterion for industrial occupiers within the third-party logistics (3PL), manufacturing, and retail/wholesale sectors. In Adelaide, the major road infrastructure project, the North-South Corridor, has been driving occupier demand north since the first stage of the project completed in 2009. 

The next stage of the North-South Corridor project is the Regency Road to Pym Street overpass which will connect the already completed South Road Superway and the Torrens Road to River Torrens section due for completion later in 2018. This will complete a 47-kilometre non-stop roadway from Gawler, in Adelaide’s outer north, to Torrensville in the inner suburban metro area. This road overpass will further support efficiencies for logistics companies in the north western industrial areas. Further to this, industrial tenants in the outer north areas like Edinburgh Parks, Penfield, and Salisbury will now have unimpeded connectivity to the densely populated residential areas around the city. Conversely, inner industrial areas like Thebarton, Brompton and Mile End will now have unimpeded freight connectivity to Grand Junction Road and the port. 

While timing on any further phases of the North South Corridor road infrastructure project are undetermined, any additional funding for road infrastructure projects will continue to unlock the connectivity of some of Adelaide’s industrial zoned precincts. In the event that the River Torrens to Anzac Highway link gets the green light, industrial occupiers in the north and outer northern precincts will have uninterrupted road access to South Road and the inner south and outer south industrial areas. 

See a copy of the plan here;

http://www.southroad.sa.gov.au/northsouthcorridor/south_road_superway/south_road_superway/improving_transport_efficiency

Immediate efficiencies gained from improved major arterial road connectivity include;

-       Fuel savings

-       Less wear and tear on company fleets

-       Significantly shortened delivery times to consumers and export freight hubs

Given this, occupier demand will remain centred on the north west industrial areas. However, given the scarcity of modern assets available to lease and the lack of development land available in these traditional blue-collar areas, I expect that pre-lease and D&C activity will radiate outwards towards the outer north. According to a recent research report (JLL, Tradition & Technology - An Adelaide Industrial Occupier Analysis), average land values in the other north are 80% cheaper than similar sized lots in the north west. This kind of value, coupled with the next phases of the North-South Connector road infrastructure project, are two key ingredients in a new wave of industrial demand in Adelaide over the next few years.