In the news

Amazon leases first Australian warehouse

Financial Review
21st July 2017

Amazon’s assault on the Australian retail market is a step closer after the US e-commerce giant settled on its first distribution centre in Melbourne’s outer south eastern suburbs.

In one of the most eagerly anticipated property deals of the year, senior industry sources told AFR Weekend Amazon has agreed to lease the 24,387 square metre former Bunnings distribution centre at 29 National Drive in Dandenong within the M2 Industry Park, owned by Melbourne’s wealthy Pellicano family.

AFR Weekend understands the vacant warehouse, which stands on a large 7.7 hectare site, could potentially be doubled in size to suit Amazon’s needs.

The A-Grade warehouse became vacant a few years ago when Wesfarmers-owned Bunnings committed to a new 43,000sq m warehouse at Salta Properties’ Portlink Dandenong South Inland Port Estate.

 It has been available for lease since October 2014 with an asking rent of $75 per square metre (or $1.8 million per annum).
 Leasing agents CBRE declined to comment citing strict confidentiality agreements. Pellicano joint managing director Nando Pellicano and an Amazon Australia spokesman were contacted for comment but had not responded by the time of publication.

Australian arrival

The online giant, founded by Jeff Bezos in 1994, has been scouting for logistics hubs in Sydney and Melbourne since revealing its ambitions earlier this year to offer it full retail offering in Australia, including Amazon MarketPlace, Amazon Prime Now and eventually Amazon Pantry and Amazon Fresh.

News of its arrival in Australia has sent the share prices of listed retailers and retail property trusts such as Scentre and Vicinity Centres sliding amid fears the $US500 billion ($630 billion) e-tailing giant could send many local retailers broke.

 Local angst – which some retail analysts believe is overblown given Amazon’s share of the US retail market (excluding food) is just 5 per cent – has heightened following Amazon’s expansion into bricks-and-mortar retail after it acquired US grocery chain Whole Foods for $13.7 billion in June alongside its growing chain of physical stores.

In Sydney, it is understood the ink will soon dry on a deal between Amazon and industrial developer Goodman Group on a large fulfillment facility in the west, rumoured to be the Oakdale Industrial Estate, on Old Wallgrove Road, at Eastern Creek. Goodman, which has developed many of Amazon’s giant warehouses across Europe has yet to confirm any such deal.

The Pellicano Group, founded in 1967 by brothers Frank and Nunzio Pellicano, is one of Melbourne’s largest privately-owned construction, development and investment businesses with a property portfolio spanning residential, commercial, retail and bulky goods, industrial and the hospitality sectors.

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