Access to energy will be crucial for automotive industrial properties shifting towards the electric vehicle (EV) revolution, a new report warns.
With global EV and hybrid vehicle production expected to surpass that of internal-combustion-engined vehicles before 2030, the pressure is on investors and automotive brands to upgrade their assets.
Demand is surging for industrial facilities with greater power capacity, charging infrastructure, battery storage capability and depot designs suited to EV fleets, says Tom Rourke, CBRE Pacific’s head of industrial and logistics, leasing and sales.
“Five forces are converging: fuel price volatility, cost-of-living pressure, federal policy stimulus, lower-priced model availability and the NSW government’s EV Strategy,” he says.
“Combined with fleet operators converting to electric vehicles and more than 8000 NSW buses moving to zero-emission technology, the ripple effects are reaching industrial real estate directly.
“Charging infrastructure, grid capacity and depot design are no longer future considerations. They are becoming current leasing and acquisition criteria.”
The sale of electric cars with a plug accounted for 36 per cent of Australia’s new car sales in August, data from the Electric Vehicle Council shows. Battery-electric vehicles (BEVs) hit record levels in August, representing 24.9 per cent of sales, while combined EV and plug-in hybrid sales were at 36 per cent.
Indicative of the rise of EVs, the Tesla Model Y BEV is Australia’s best-selling new vehicle.
Power capacity becomes a key industrial property requirement
Companies across Australia are increasingly converting to electric vehicles for their fleet supply. In June, Linfox launched a fleet of 26 battery-powered prime movers across Melbourne, Brisbane and Adelaide to cut diesel use, emissions and running costs on some of the country’s busiest freight routes.
In NSW, the government aims to boost the current number of electric buses from 220 to 1700 by 2028.
“As we see more distribution fleets move to EVs as opposed to fuel, we’ll need somewhere to charge them, and that will sit with industrial land … that has the capacity and the infrastructure to charge these vehicles,” Rourke says.
“But it’s really competitive at the moment with data centres and the need for power, and that [is] quite difficult across Australia as opposed to in China, where it’s readily available.
“A lot of the facilities that have been built in Australia are just distribution facilities, and the power availability in those is really limited. We’re finding power now to be a pretty rare commodity across the country.”
Automotive industry restructures property portfolios
Across the Asia Pacific region, many vehicle businesses are restructuring to keep pace with the rapid transition to EVs, according to the CBRE report Making It & Moving It: What’s New in Automotive Manufacturing & Logistics Real Estate.
It’s been almost 10 years since the last car rolled off the assembly line at Toyota in Altona, Victoria, before it closed in 2017. Large-scale car manufacturing has never started again in Australia, with many old factories being sold off.
This includes the sale of the former Holden factory in Elizabeth, South Australia, to Melbourne-based Pelligra Group, which has leased it to Australia Post for the development of a $500 million parcel super-hub.
Data centres will replace a former Holden factory site in Clayton and a Ford assembly plant in Broadmeadows, both in Melbourne.
If they are not disposing of assets, vehicle companies are restructuring to leaner operating models through sale-and-leasebacks.
Global examples include Nissan’s sale-and-leaseback of its Yokohama global headquarters for $US623 million ($865 million) in November last year and Hyundai’s securitisation of 11 selected Korea-wide properties with a total asset value of $US400 million ($555 million) through a private real estate investment trust.
