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Three steps to success that DCs need to know
Three steps to success that DCs need to know
21 Dec 2022| News |
1260 words

One of TMX’s latest technological innovations is its metaverse virtual reality. Justin Fried, TMX Executive Director, Property, explains to MHD what disruptions are occuring in the industrial property sector, and how this tool can help businesses with designing and optimising  their facilities.

Three key challenges for the industrial property market loom in the coming years:

  • Planning ahead
  • Agility in an uncertain world and
  • Dealing with external factors beyond your control

PLANNING AHEAD

Justin Fried says that with unprecedented demand, historically low existing building vacancy, and a post-COVID development pipeline that is playing catch up, major occupiers must be well prepared or risk an expensive compromised solution. What this means is that planning ahead will be key.

“The major industrial markets of Melbourne, Sydney, Perth – and Brisbane to a lesser extent – are experiencing their lowest vacancy rates for quite some time,” Justin explains.

“This means occupiers have less choice for short-term decision making, which is creating a wave of pent-up demand, as these groups seek properties to meet operational requirements.

“The COVID-19 pandemic accelerated demand and stalled development of speculative assets, resulting in short supply of stock.

“These demand and supply conditions, coupled with a sharp increase in construction costs, have driven rents up considerably.”

As a result, significant new sites won’t come online until late 2023 to mid 2024.

“With such high demand, we’re seeing a lot of that space being pre-committed very early on,” Justin says.

“Will future supply ease this? We don’t know just yet, with the potential release of considerable overflow space taken up during the pandemic another factor at play.

“The major message here is to plan ahead. Don’t be caught out by waiting for your future property needs to be known entirely before you begin that process.”

Given the short supply and long development pipeline lead times, occupiers should be determining their supply chain – and resulting property network requirements well ahead of critical lease dates – to enable a procurement process within an appropriate timeframe.

This initial phase of review, how businesses handle and move their stock and where they store inventory, is a critical piece of analysis.

By being prepared, businesses can avoid unnecessary operational pressures and safeguard against the swings of market supply and demand.

AGILITY IN AN UNCERTAIN WORLD

The second key challenge is about responding to changing market movements.

Automation has been the catchcry for some years, as the primary path to achieving productivity gains and fulfilment reliability.

Justin says that while automation will remain a critical factor in supply chain success for the foreseeable future, an ability to remain responsive is a more pressing short-term consideration.

“With so much uncertainty remaining in global supply chains, agility and flexibility to changing market conditions will help predict the winners from the failures,” he says.

“Businesses need to have a network that can adapt to change, particularly in a post-COVID environment.

“Initially, there was a big push for automation, which is still relevant, but the bigger consideration now is being flexible and agile.”

EXTERNAL FACTORS BEYOND YOUR CONT

The third key challenge for the industrial property sector involves external factors such as:

  • Regulatory enforced supply-chain shutdowns
  • Rising interest rates and
  • The structural shift to online shopping.

“COVID has certainly taught industry a lesson. It taught us about the need to respond to unforeseen circumstances,” Justin says.

“For those who were unprepared, or incapable of responding, they have come out of COVID in a worse position than others who were better prepared.

“These external factors, and government-imposed shutdowns globally, remain possible in the future. The last few years have proved that.

“Consumer behaviour is also changing and is perhaps a little more predictable.

“For example, it’s not a matter of if retailers will grow their e-commerce offering, it’s a matter of how much and when, and thinking about how they’ll develop a supply chain to cater towards those new channels of demands.

”Finally, the cost of money is increasing around the world as central banks raise interest rates in an attempt to contain surging inflation.

“The previous record low interest rates meant that risk may not have been adequately priced into the decision-making process of some players in the supply chain, which will pose an increasing challenge for the next few years at least, until or if inflation is brought under control.”

What does all this mean?

How can investors and occupiers prepare their supply chain around a property that isn’t even operational yet?

Firstly, take good advice. Secondly, look to innovation.

INNOVATION

This is where TMX Metaverse, a virtual reality solution that can help businesses review their operations in a digital-immersive world, comes in.

Metaverse allows businesses to see how the flow of their facility will work – before construction starts. They can sit side by side with TMX’s designers to amend the project in real time.

Such thinking should be part of every company’s planning process.

TMX Metaverse allows all stakeholders involved in the design of a warehouse to use virtual reality headsets, interacting with each other inside a fully designed, virtually operational 3D warehouse.

Incredibly, they can virtually create and adjust features in real time, seeing them come immediately to life.

Being immersed in a virtual environment enables stakeholders to understand the space and design, something that cannot be achieved via a traditional 2D plan.

Not only that, but the Metaverse Showroom allows users to see how the latest automation, robotics and material handling equipment will work inside a warehouse.

It is like looking into the future.

Metaverse can radically cut down the costs of trial runs, as well as allowing warehouse designers and users to prepare for contingencies, unforeseen implementation hurdles, and unexpected opportunities before a purchase is made, or construction begun.

In other words, using the metaverse can help you remain agile and responsive, the second great challenge of our age.

“Metaverse allows our clients to virtually design their facility one day, and then facilitate early team training,” Justin says.

“Eighteen months later they will stand in the physical real estate and operating solution. By using this technological solution, they can design and prove it before they procure it.

“Given the often-significant capital sums involved for warehouse design, Metaverse shows key stakeholders how their facility is going to work, before the warehouse is built, which can accelerate the decision-making process and promote business-wide buy-in.”

GET GOOD ADVICE

Finally, end-to-end solutions are critical for both the supply chain and property networks because the two aren’t just connected to each other, they’re one and the same.

As a result, get the best advice available, before you start planning.

“There needs to be a holistic discussion about the solution and that’s where businesses like TMX can assess the operational requirements well ahead of time to then be able to establish the most efficient and effective supply chain model design,” Justin says.

“We are experts with a team of more than 200 industry professionals across property, supply chain and project management who can provide advice.

“All facets need to be considered from an operational and design perspective as well as how the metrics of the market are going to work to make the procurement possible.”

“The more they can do now to plan and understand their future state before committing to it, the better prepared they will be and ultimately the higher quality of the result they will achieve.”

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