Qube pre-commits Woolworths to neighbouring distribution centres at Moorebank Logistics Park

Woolworths’ national and regional distribution centres will be connected by an air bridge to reduce transport requirements.

Qube has pre-committed Woolworths to two automated logistics centres, set to neighbour each other and be connected by an air bridge, in Sydney’s Moorebank.

The supermarket giant will occupy one – measuring 40,700 square metres – as its national distribution centre (NDC).

A smaller, 34,600 sqm factory will be its regional distribution centre (RDC).

Qube managing director Maurice James lobbied for more than 15 years for an intermodal terminal at Moorebank. The infrastructure initiative connecting Port Botany, he said, will deliver Woolworths cost and time efficiencies.

“The new facility will consolidate operations into a unique purpose-built high-bay facility, leveraging world-leading advancements in retail, supply chain and semi-automated and automated technology,” Qube said in a joint statement with Woolworths.

“An air bridge between the sites will reduce transport requirements by allowing NDC pallets to be cross docked to the RDC removing shuttle transport and allowing product to be efficiently received and processed,” the landlord added.

Both structures will include safety features to reduce manual handling and be aiming for a Five Star Green Star Design and As-Built rating.

Sustainability initiatives including solar PV systems, LED warehouse lighting and rainwater harvesting.

It is Moorebank’s latest high-profile industrial lease deal: two weeks ago Manheim Auctions committed to a 5978 sqm facility in Moorebank Avenue, opposite one it occupies and will retain.

Amazon also chose Goodman’s Centenary Distribution Centre in the suburb for its first New South Wales fulfilment centre, a 43,000 sqm complex which opened last year.

Qube to earn $30m pa when Woolworths’ facilities are operational

Woolworths’ two factories will occupy a total land area of 26 hectares at Moorebank Logistics Park – marketed as “the largest intermodal logistics precinct in the country”.

Assuming planning approval, the NDC would be operational by 2023 with the second facility scheduled to open a year later.

Both are anticipated to reach full capacity by 2025, Qube added.

Woolworth’s initial term is 20 years.

Its rental agreement includes six (renewal) options, each of five years.

The pair’s arrangement at Moorebank includes two leases and two development management deals.

Specifically, the tenant will develop the warehouses while Qube will fund the construction of them.

“Qube’s capital commitment for the base building construction is expected to be between $420-$460m which will be incurred over the next three to four years with revenue of approximately $30m per annum when fully operational,” the landlord said.

“Woolworths Group will invest around $700-$780m in the technology and fit out of the two distribution centres over the next four years,” it added.

Last month, rival Coles pre-committed to two fulfilment centres which Charter Hall will now build, including one at the 14ha Horseley Drive estate in Wetherill Park, 34kms west of Sydney (the other is in Melbourne’s Midwest Logistics Hub at Truganina).

In April, Qube sold a 13.6ha site in Melbourne’s inner west Brooklyn to MaxCap Industrial Opportunity Fund, for $65m (story continues below).

Moorebank Logistics Park  

Qube is developer, manager and operator of the Moorebank Logistics Park, following a recent 99-year lease from the Commonwealth’s Moorebank Intermodal Company (MID), which is overseeing its rebuilding.

The 243ha land is 27kms south west of the city.

When developed, the precinct will include up to 850,000 sqm of warehousing.

“The scale of available warehousing will allow tenants at Moorebank Logistics Park to expand when required and facilitate co-suppliers to locate their own warehouses within the park,” the statement said.

“A direct rail link to Port Botany commenced operations in September 2019 and an interstate rail terminal will be developed in the future.

“When complete, the facility will have the capacity to support the transport of 1.5m TEU [twenty foot equivalent unit capacity] between Port Botany and Moorebank and the national freight network.

“The shift from road to a dedicated rail line will remove thousands of heavy truck movements off Sydney’s road network daily.

“Qube firmly believes that rail is the most cost-efficient mode of freight transport to Sydney’s south west enabling containers to be delivered to warehouse, with the opportunity for goods to be unpacked and dispatched to customers on the same day as the container is unloaded from the ship”.

“An economic benefits study forecasts the facility will generate around 6,800 jobs, $11 billion in economic benefits, reduce greenhouse gas emissions by more than 110,000 tonnes a year, ease traffic pressures on Sydney’s road network, and streamline the supply chain to deliver cost savings to business and consumers”.

Competitive advantages abutting freight: landlord and tenant

Qube managing director Maurice James said the “the benefits of railing containers direct from Port Botany to a terminal co-located with warehousing across a site the size of the Sydney CBD will deliver Woolworths time and cost efficiencies”.

“Our project team is looking forward to working with the Woolworths team in delivering an optimal solution for their operations.

“Woolworths’ long term commitment will reinforce the commercial appeal of this nationally important infrastructure and freight project,” the executive added.

Woolworths Group chief executive officer Brad Banducci said the Moorebank properties “will transform the way we serve our NSW stores, strengthen our network and deliver on our ambition to create Australia’s best food and grocery supply chain”.

They will also “help us improve on-shelf product availability with faster restocking, reducing congestion in stores, and enabling a safer work environment for our teams with less manual handling”.

Moorebank Ave is being realigned as part of the renewal, but first, the landlord must upgrade the existing one.

“As previously announced, there was a commercial dispute between Qube and MIC regarding who had responsibility for funding this upgrade of part of the current Moorebank Ave,” the Qube statement said.

“An arbitrator has recently determined that part of those works are not MIC funded works as they are not in the alignment shown in the Precinct Master Plan.

“As a result of this decision, Qube’s capital expenditure for these works is expected to increase by around $60m”.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco