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Western Australia, especially Perth has great potential. It should be a thriving epicentre. But in order to achieve this a better plan needs to be considered, red tape needs to be loosened. But we can’t look to create this plan ourselves just by thinking of the needs of Perth. We need to ask ourselves what do we ultimately want to become? And look globally for role models.

In order to understand this, if we look back at the challenges within the marketplace we can then appreciate the benefits ahead for both WA and the industrial market.

In 2018 we had seen a 30-40% downturn in leasing and sales rates in WA, taking us back 10 years. This has removed massive amounts of capital from this space as buildings have revalued to much lower prices. Rents and sales figures are reduced as tenants and purchasers hold the power being spoilt for choice with next to no urgency to commit. If you combine this decrease in demand with a difficulty to finance, you have the recipe for a depressed market. Lower returns on investments, month on month devaluation of the residential sector, lower wages and next to no wage growth, high unemployment rate and a struggling retail sector.

I refer to it as the Wedge!

We are all in this “wedge” together and it has squeezed all involved in the space to think smarter, work more efficiently, take on more volume for less margin, re-negotiate overheads and expenses and run very, very lean. 

So, where to from here?

Thankfully we have finally maintained a stable government that will promote investment and focus on a stronger economy. Population growth into WA has finally turned a corner and is forecast to grow 1.2% this year. That’s about 25 thousand people coming into WA. Which is great for demand.

Non-residential building approvals rose 13% at the end of 2018. This to me indicates smart money is moving towards developing commercial assets at the bottom of the cycle whilst labour and materials are cheap.

Mineral sales rose by 16% as the price of LNG and Iron continue to run at high levels as we benefit from a low Aussie dollar. Not to mention the new kid on the block being Lithium with high demand as we fuel the worlds need for portable energy.

WA had the highest increase of container movements for both import and export. Rising almost 11%. This means our import and export market is now growing at the fastest rate within the country.

We have seen an increase in GST allocation to 47c in the dollar adding about $1 billion dollars to the coffers year on year. That money will go into infrastructure projects that we will all benefit from.

WA’s annual wage growth which has been falling since 2012 has finally seen an increase of 1.6% and is forecast to get to 2.75% in 2020. This along with some of the governments recent promises may help see the Residential market gain some ground as we now have the cheapest average house price in the country. Not to mention the recent win on Stamp Duty rebate for off the plan apartments. 

Combined growth across many sectors will see the welcoming of new technology into the industrial space which will radically change the way we see and do business. 

Warehousing will change as the types of businesses that inhabit them do. Large scale warehouses may make way for smaller, high rise/stackable storage facilities with automated picking robots.

Commercial retail will change as the experience of shopping changes. We are now seeing apartment living above shopping centres like Westfield Karrinyup. A model long been done in Asia for many years. 

But then there is the ‘Internet of Things’ (IoT)

What is it and how will it effect industrial. The IoT will connect everyday items and how they send and receive data. It refers to the billions of physical devices around the world collecting and sharing data. Its possible to turn anything, from a sensor to a smart speaker, to a driverless truck into part of the IoT. As demand for fast and reliable connectivity becomes the norm, landlords, property owners or developers could find 5G key to attracting clients to their spaces as its 5 times faster than the fastest NBN. It may also allows clients to experience spaces in virtual reality and become a useful sales tool for real estate agents. The 5G network will accelerate new tech faster than we have ever seen before or even imagined. No longer will we simply pickup and look at our smart phones. Our lives will be immersed within…..

This constant connectivity will change the way we consume and although we think the retail sector is dying, its not. Its just relocating to industrial. In the US the industrial sector is responding to the demands of E-Commerce and is their strongest growing property market, recording growth in double digits. And the US is not even the largest e-commerce trading country. China takes the cake with a whopping 630 million dollars per year on e-commerce compared with our 18 million.

Some of these trends will translate to a reduction in office space and sizes may reduce further as workers become virtual. Large offices will be in less demand as everything becomes shared. Shared logistics through electric trucks, vehicles and drone networks.

Robotics will sort through large levels of stock to fast track picking processes for same day delivery. This will require much higher and larger warehouses but also the design inclusion of docking stations and landing bays for drones. We are starting to hear of warehouses constructed to a whopping height of 20 m with the plan to integrate sophisticated picking systems ideal for E-commerce. With the integration of artificial intelligence into our business, the need for steady power provisions through renewable power sources, will mean that solar and battery storage should be mandatory.

Which leads to Lithium. Hopefully WA wont just be an exporter of Lithium but be the worlds leading manufacturer for the Lithium ion battery boom!

It could even be possible for massive 3D Printers the size of large warehouses to manufacture entire buildings out of multiple materials. Imagine your home printed out and transported to site within 1 week. Safety, waste management and speed of construction will all be improved with new tech.

Some of you maybe thinking, so how will I fit into all of this in the future?

We will all need to embrace technological advancements, or risk disappearing. With any change comes major opportunities and new industries will open for the younger generations, that don’t even exist today. If there is anything that the last 5 years doing business in WA have taught all of us ……it is resilience and how to survive in a changing market.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Perth has great potential. It should be a thriving epicentre. But in order to achieve this a better plan needs to be considered, red tape needs to be loosened. But we can’t look to create this plan ourselves just by thinking of the needs of Perth. We need to ask ourselves what do we ultimately want to become? and look globally for role models.

In order to understand this, lets have a look back at the challenges within the marketplace before we can really appreciate the benefits ahead for both WA and the industrial market.

In 2018 we had seen a 30-40% downturn in leasing and sales rates in WA, taking us back 10 years. This has removed massive amounts of capital from this space as buildings have been revalued to much lower prices…. Rents and sales figures are reduced as tenants and purchasers hold the power being spoilt for choice with next to no urgency to commit. If you combine this decrease in demand with a difficulty to finance, you have the recipe for a depressed market. Lower returns on investments, month on month devaluation of the residential sector, lower wages and next to no wage growth, high unemployment rate and a struggling retail sector.

I refer to it as the Wedge!

We are all in This “wedge” together and it that has squeezed all involved in the space to think smarter, work more efficiently, take on more volume for less margin, re-negotiate overheads and expenses and run very, very lean. No more Friday lunches to Coccos that’s for sure!!

So ….where to from here?

Thankfully…. we have maintained a stable government that will promote investment and focus on a stronger economy

Population growth into WA has finally turned a corner and is forecast to grow 1.2% this year. That’s about 25 thousand people coming into WA. Which is great for demand

Non-residential building approvals rose 13% at the end of 2018. This to me indicates smart money is moving towards developing commercial assets at the bottom of the cycle whilst labor and materials are cheap.

Mineral sales rose by 16% as the price of LNG and Iron continue to run at high levels as we benefit from a low Aussie dollar. Not to mention the new kid on the block being Lithium is in extremely high demand as we fuel the worlds need for portable energy.

WA had the highest increase of container movements for both import and export. Rising almost 11%. This means our import and export market is now growing at the fastest rate within the country.

We have seen an increase in GST allocation to 47c in the dollar adding about $1billion dollars to the coffers year on year. That money will go into infrastructure projects that we will all benefit from.

WA’s annual wage growth which has been falling since 2012 has finally seen an increase of 1.6% and is forecast to get to 2.75% in 2020. This along with some of the governments recent promises may help see the Residential market gain some ground as we now have the cheapest average house price in the country.

We have now seen a rate cut from the reserve bank  this week and will be followed by a review of serviceability metrics for borrowers, led by APRA as it tries to stimulate the fall in eastern states properties. Commonwealth bank who are key sponsors tonight have confirmed they will be forwarding on these rate cuts to clients.

The question I have is Where were APRA  5years ago when the WA market started tanking.??

 

Combined growth across many sectors will see the welcoming of new technologys into the industrial space which will radically change the way we see and do business

 

The internet of things…

What is it and how will it effect industrial. The internet of things will connect everyday items and how they send and receive data. It refers to the billions of physical devices around the world collecting and sharing data. Its possible to turn anything, from a sensor to smart speaker to a driverless truck into part of the IoT. As demand for fast and reliable connectivity becomes the norm, landlords, property owners or developers could find 5G key to attracting clients to their spaces as its 5 times faster than the fastest NBN. It may also allows clients to experience spaces in virtual reality and become a useful sales tool for real estate agents. The 5G network will accelerate new tech faster than we have ever seen before or even imagined. No longer we will simply pickup and look at our smart phones. Our lives will be immersed within…..

This constant connectivity will change the way we consume and although we think the retail sector is dying, its not. Its just relocating to industrial. In the US the industrial sector is responding to the demands of Ecommerce and is their strongest growing property market, recording growth in double digits. And the US is not even the largest ecommerce trading country. China takes the cake with a whoping 630million dollars per year on ecommerce compared with our 18million.

 

Some of these trends will translate to a reduction in office space and sizes may reduce further as workers become virtual. Large offices will be in less demand as everything becomes shared. Shared logistics through electric trucks, vehicles and drone networks.

Robotics will sort through large levels of stock to fast track picking processes for same day delivery. this will require much higher and larger warehouses but also the design inclusion of docking stations and landing bays for drones. We are starting to hear of warehouses constructed to a whopping height of 20m with the plan to integrate sophisticated picking systems ideal for E-commerce. With the integration of AI into our business, the need for steady power provisions through renewable power sources, will mean that solar and battery storage should be mandatory.

Which leads to Lithium. Hopefully WA wont just be an exporter of Lithium but be the worlds leading manufacturer for the Lithium ion battery boom!

I also believe Massive 3D Printers the size of large warehouses will manufacture entire buildings out of multiple materials. Imagine that, your home could be printed out and transported to site within 1 week. Safety, waste management and speed of construction will all be improved with new tech.

Some of You maybe thinking, so how will I fit into all of this in the future?

We will all need to embrace technological advancements, or risk disappearing but with any change comes major opportunities and new industries will open for the younger generations, that don’t even exist today. If there is anything that the last 5 years doing business in WA have taught all of us ……it is resilience and how to survive in a changing market.

I hope tonight you leave looking at Builtink in a new light. Although small, and young we have big goals and we want to achieve them with you. So please stay, my brother and I want to catch up with each and every one of you.

Thankyou for taking the time out tonight to come and celebrate with us.