Key challenges
As it was the first time entering into the Australian market, LF Logistics were unfamiliar with the third-party logistics (3PL) and property environment, where supply vs demand dynamics in the property market were not in the favor of LF Logistics. Upon emerging into a new market, there was immediate growth, where LF required multiple new facilities.
Additionally, due to internal delays from H&M awarding the 3PL contract and their demanding future start date, LF Logistics had to sign a Heads of Agreement (HoA) prior to written confirmation.
Our approach
There were a number of steps required for TMX to undertake in order to drive significant results for LF Logistics, including:
- Undertook the business case, designed the optimum warehouse layout (inclusive of internal fit-out) and participated in the presentation so LF Logistics could pitch to secure the H&M contract.
- Coordinated the procurement and delivery of the multi-level mezzanine.
- A significant volume of inputs was required from TMX to secure a major contract with H&M.
- Created a comprehensive technical design brief to ensure all bespoke items required by LF Logistics were included within the base building definition.
- Ran an exhaustive property procurement process to create maximum competitive tension in the marketplace.
- Project managed the initial delivery of a purpose-built facility and the adjoining speculative development (occurred 6 months post the practical completion of the pre-lease project).
LF Logistics relied on the specialists within TMX to enter into the Australian market. I cannot speak highly enough of the assistance they gave our business. Their model is unique, they were with us from start to finish, and we look forward to continuing to partner with them well into the future.
The results
TMX were able to generate significant results through the identified tactical approach outlined, including;
- LF Logistics secured their first major 3PL contract in Australia, resulting in numerous other opportunities for their business.
- Negotiated over 20% incentive, ensuring a net effective face rent below $100 per sqm on a medium-term lease (five years).
- Generated a 14% saving from the successful owner’s initial offer (in a highly competitive environment) to their final offer.
- Over $1.4 million of provisional sums were included within the base building definition, allowing LF Logistics to achieve full utilization of their incentive, prevent rental creep and significantly reduce future make good costs.
- Practical completion of the facility was achieved in strict timeframes (within 5 ½ months of DA) This included the integration of an extensive multilevel mezzanine (an extra 13,000 sqm of space) incorporating 180,000 pick spaces (equated to 7.5km of sprinkler pipework and around 1,500 light fittings) to increase storage capacity while maximizing footprint.
- TMX were also able to finalize the project at $860,000 (approx.) under project management budget.