Airbnb-style space is the new warehouse trend

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Flexible lease terms for industrial assets, in what Airbnb is to hotels, is a fast-rising trend in a sector where warehouses are in hot demand but supply is limited, according to overseas experts.

It comes as the relentless rise of same-day delivery has merchants on the hunt for warehouse space close to their urban customer base.

Goodman Group's vertical  Interlink warehouse, Hong Kong.

Goodman Group's vertical Interlink warehouse, Hong Kong.

It is expected that with limited land supply in the inner-city rings of Melbourne and Sydney, industrial property owners will look to go vertical.

Goodman Group, which releases its December half results on Thursday, is exploring the options of vertical warehouses in areas such as South Sydney and parts of inner-west Melbourne.

The group has also built some of the largest vertical sites across Asia, starting with the Interlink in Hong Kong.

CLSA's analyst said they expect Goodman to potentially upgrade its 2019 earnings per security guidance from 7 per cent to 8 per cent from increased development completions and work in progress of more than $3.6 billion, driving higher development income.

Rich Thompson, head of the global supply chain & logistics solutions team at JLL, says strong demand has made industrial property increasingly hard to find.

And even when space is available, it's typically not found in the city centre, but instead in sprawling suburban sheds the size of football fields.

But new technology platforms are emerging that allow existing corporate occupiers to sublet smaller areas of unutilised warehouse space, eliminating the need for companies in need to lease an entire building.

On a recent trip to Australia, Mr Thompson and Craig S. Meyer, the president industrial for JLL Americas, they said warehousing is a service and customers are now looking for "flexible space and leasing conditions".

Rich Thompson, head of global supply chain and logistics solutions at JLL.

Rich Thompson, head of global supply chain and logistics solutions at JLL.

"Because customers today demand such fast delivery when they order online, companies need more smaller locations rather than fewer larger locations," Mr Thompson said.

"The 'Airbnb model for industrial warehousing space' allows companies to be nimble enough to respond to seasonal changes and compete in the age of e-commerce."

Mr Meyer said it can be described as a "disruptor" to the logistics sector and is a "big challenge" facing landlords.

Mr Thompson said Seattle-based FLEXE is the first of a handful of such start-ups, connecting companies in need of warehousing space and flexible fulfillment options with a network of warehouse partners that have excess capacity and are willing to provide the needed warehousing services.

Transportation and logistics bellwether UPS announced its own warehousing platform, Ware2Go, in August. Warehouse Exchange and Flow Space are also emerging players in the space.

"Over time the third party logisitics (3PL) providers will be looking at a variety of leases and how they can best service their customer base as demand for same-day delivery expands," Mr Meyer said.

"We expect flexible space to about 20 per cent of the industrial market in the medium term."