LANDCORP’S bid to build a network of industrial estates in regional Western Australia is premised on meeting industrial demand to support the state’s major mining and resource projects over the next decade; but analysts warn it’s a strategy that can only work in concert with a robust pipeline of industrial land in Perth.
CB Richard Ellis’ latest industrial property research identifies the supply of land as one of the most serious barriers to WA’s future prosperity and its capacity to reap the rewards of the resources boom phase II.
Research analyst James Phelan said WA’s biggest challenge was to ensure it had the fundamental resources necessary to maintain high levels of growth, including skilled labour, construction materials and industrial land.
Meeting the commercial demands of the multi-billion dollar projects slated for WA’s regions is a key focus for LandCorp’s industrial arm, and its general manager John Hackett was confident this emerging demand would be met with a “sledgehammer of supply.”
LandCorp has identified key parcels of land in close proximity to major projects such as Chevron’s Gorgon development, as well as the proposed gas hub at James Price Point north of Broome.
Its strategy is to undertake the preliminary zoning and subdivision work to ensure industrial parcels adjacent to these massive projects are up and running before the tide of demand rises.
Building this supply is viewed by some analysts as a response to what critics call the planning failures in Perth that have led to a shortage of large parcels of industrial land with strong links to the city’s major freight arteries.
But Mr Hackett characterises LandCorp’s regional strategy as a response to a step-change in demand.
“Industrial is really a response to the whole resources industry, that’s the major driver,” Mr Hackett said.
“Just how prospective these projects are is really going to impact, if they all get up we will be under enormous demand not just for human capital but for industrial land and residential land … and even if 50 per cent of these projects get up there will still be significant demand over the next 10 years.”
Mr Hackett said LandCorp had historically been able to keep pace with organic demand in WA, but this latest surge of activity in the resource sector required a proactive approach.
“Our strategy is all about trying to get some high-volume projects to produce that (supply) and we have responded that way by looking in the Pilbara, in both Port Hedland and Karratha we have put two new estates that are nearly 40-50 per cent the size of Canning Vale,” Mr Hackett told WA Business News.
“That will hopefully mediate the strong demand that is going to come forward.”
In addition to these new Pilbara estates LandCorp is developing new industrial land in Geraldton for the proposed Oakajee project, in Collie for Perdaman Industries’ planned coal-to-urea plant, and the Blue Haze development in Broome to service the proposed gas hub at James Price Point.
It’s a significant investment in the state’s economic future but industrial analysts are quick to point out that Perth will still be a vital hub for these major industrial projects, and consequently the availability of suitable land in the metropolitan area is very important.
Property Council WA executive director Joe Lenzo sees some major positives in LandCorp’s regional strategy, but warns the authority must be equally focused on addressing the urban land shortage.
“There’s not much use having a regional strategy if you lose focus on the primary areas and whether we like it or not industrial land primary areas are still in the metropolitan area,” Mr Lenzo said.
“Even if you do say we have heaps of land in the Pilbara, the staging post is still here.”
Developing industrial land in the regions brings its own set of challenges and the projects often include elements such as housing for workers.
Colliers International industrial director Wayne Chorley said the north-west was an increasingly important region for the industrial agents but was still a very specialised market.
“A lot of development is taking place up there but it’s a different type of developer; you don’t find the Perth developers doing business up there … it’s harder, construction costs are near on double,” he said.
“We are dealing with a national company that wants to set up an operation in either Port Hedland and or Newman or Tom Price and as part of that proposal with Newman or Tom Price they need accommodation built because there is simply nothing up there.”