SYDNEY, AUSTRALIA
FEARS that Sydney’s multi-billion-dollar Aerotropolis and its surrounding land will turn into a giant white elephant are about to be quashed, with a flight of cash and new buildings set to land from next year.
Retailers are likely to build new warehousing and distribution centres with the latest in robotics and automation across 11,200 hectares, as they emerge from the lingering effects of ‘economic long COVID’ [1].
Why?
Initially, the global economy shut down to contain COVID in 2020 and 2021. In response, governments, and central banks, faced with the prospect of mass unemployment and social unrest, did the only economic thing they could and threw money at everyone, everywhere, all at once.
And they did it to meet the worst-case scenario, in the face of complete uncertainty and political pressure.
In response, retailers across Australia massively overstocked in clothing, homewares, and white-goods in 2021 and 2022 in the belief that cashed-up consumers spending government handouts from their keyboards at home would continue doing so indefinitely.
Shipping delays caused by the pandemic also meant retailers ordered excess stock to fulfil orders in time.
However, our emergence from lockdown in late 2021, a return to normal government spending, and interest rate increases in response to the post-COVID inflation surge, saw consumer discretionary spending fall off a cliff.
This created an enormous problem.
Retailers were left with warehouses filled with excess stock. Heading into the Black Friday and Christmas sales season last year, they had between one- and two-years’ supply of clothing, electronics, outdoor activity, luxury goods and some cars – rather than the traditional three months.
That partly explains why discounting for the 2023 Christmas sales was so dramatic, as retailers rushed to clear excess stock before changing consumer tastes made them redundant.
According to the Australian Bureau of Statistics, such discounting saw consumer spending overall drop 8.5% on household goods, 8,2% in department stores and 5.7% on clothing, shoes, and accessories [2].
Those warehouses are now almost back to normal. By mid-this year the focus is expected to turn to investment planning, to be ‘shovel ready’ in 2025.
This is where the good news for the Aerotropolis and the surrounding lands, now called Bradfield city and located about 5kms south of Sydney’s second international airport being built at Badgerys Creek, comes in. It could set up Sydney economically for the next 100 years.
That is because economic COVID has forced large companies to dramatically reset the way they do business, and look at building new 21st century warehouses, with the latest in robotics and automation, to dramatically lower costs and increase productivity.
Amazon has already led the way as the most high-profile company to have already built a state-of-the art mega distribution centre near the Badgerys Creek Airport site, at Kemps Creek, with another to follow at nearby Horsley Park [3].
Others are now likely to follow at the nearby Aerotropolis Bradfield site.
The fact is, in Sydney, there is nowhere else to go, and with development timelines what they are, businesses need to start planning now.
According to the NSW Government, the Aerotropolis is designed to create 200,000 new jobs and become a high skill jobs hub across freight and logistics, aerospace and defence, manufacturing, healthcare, agribusiness, education, and research industries. [4]
Progress is now being made. The first stage Advanced Manufacturing Research Facility (AMRF) is due to open in the middle of this year, with 30 local and international companies expressing interest. [5].
Winners all round
The Aerotropolis will increase both the NSW economy’s capacity and productivity. It will create jobs that are geographically close to where workers live, decreasing the daily commute from west to east in the morning and west to east in the afternoon.
The reduction in retail costs, and increase in efficiency, should help ease inflation.
The Bradfield City Centre Master Plan will deliver space for 80 buildings up to 15 stories high, with two million square metres of gross floor area available for development.
That is potentially good news for customers and for the environment and could ease rental pressures in western Sydney’s industrial property market while releasing warehouse space for re-zoning.
COVID has had a very long economic tail beyond merely price rises. It has forced companies to reassess ageing facilities in other parts of Sydney and look to build state-of-the-art premises from scratch. It has forced businesses to take a short-term view of their existing facilities.
The obvious answer is the Aerotropolis, where greenfield sites mean planning approvals can be relatively straightforward, as road and rail links come closer to completion.
That means it’s now time for the Aerotropolis to finally take off.
An abridged version of this piece was originally published in The Daily Telegraph on March 19, 2024.
References
[1] https://www.wpca.sydney/assets/Documents/Publications/Fact-sheets/WPCA_OnePageGlossies_Aerotropolis_WEB.pdf
[2] https://www.9news.com.au/finance/december-retail-sales-figures-abs-data-black-friday-sales-christmas/939948b5-ec2e-49b0-b261-0eadae0b71a7
[3] https://www.dailytelegraph.com.au/news/nsw/western-sydney-aerotropolis-masterplan-for-bradfield-city-centre-revealed/news-story/0006f9a99d52f5114bc6faa54e15a596
[4] https://www.planning.nsw.gov.au/plans-for-your-area/priority-growth-areas-and-precincts/western-sydney-aerotropolis
[5] https://www.dailytelegraph.com.au/news/nsw/western-sydney-aerotropolis-masterplan-for-bradfield-city-centre-revealed/news-story/0006f9a99d52f5114bc6faa54e15a596