DON’T BE SURPRISED IF ALIBABA OR AMAZON BECOME MAIN TENANT OF ‘AREA LOGISTICS @ AMPANG’
BY Zoe Phoon
“The property is designed as an e-commerce fulfillment centre and logistics hub. It is there to compliment the rapidly growing e-commerce space requirements in the coming years,” Datuk Stewart LaBrooy, executive chairman, AREA Management Sdn Bhd, developer of AREA Logistics @ Ampang, tells Property360.
“I won’t be surprised to see Alibaba or Amazon becoming our main tenant in the not too distant future,” he adds.
LaBrooy was asked to respond to Alibaba Group’s recent announcement of its distribution centre in Malaysia as part of a wider agreement to build up a digital trading network here.
To be ready by end-2019, Alibaba’s new facility near the KL International Airport will serve as a regional e-commerce and logistics hub, and operate as a centralised customs clearance for imports and exports.
Businesses understand that the customer is king: In the end or in the future, it’s customers who determine the direction of a business.
Millennials are changing retail patterns around the world. Online shopping is booming.
In Malaysia, the new market reality of changing shopping needs requires a fresh breed of managed industrial parks.
As speed is important to customers, retailers are moving their facilities closer to population centres to bring their supply chains nearer to the last mile of distribution and their buyers.
With that, e-commerce fulfillment centres and logistics hubs have become a magnet for retailers who compete on the speed of their deliveries, i.e. to get goods to customers faster.
Superb location, amenities, hires
AREA Logistics @ Ampang is KL’s first inner city mega e-commerce fulfillment centre and logistics hub. It is coming up and would be ready in 2Q 2019.
LaBrooy said it is the result of intensive research by AREA Management into operators’ requirements for inner city same-day deliveries and is purpose built to serve the inner city logistics and supply chain networks.
It will provide clients the possibility for route optimisation, delivery scheduling, courier collaboration, GPS vehicle tracing and reverse logistics strategies. In short, “your e-commerce success starts here”.
It will be Malaysia’s first three-level ramp-up warehouse, “one of a kind landmark” designed for logistics.
It provides round-the-clock security with full CCTV surveillance and an average of 18 docks with levellers per floor and warehouse ramp catering to 40ft trucks. It is also green building compliant.
The gated-and-guarded industrial property will have over 600 car parking bays, turnstile and access card control system, and broadband internet.
It also offers services such as self-storage, last mile delivery, warehousing, e-commerce, parcel sorting and cold-chain logistics.
AREA Logistics @ Ampang has superb connectivity to major towns and commercial areas, as well as excellent accessibility and easy mobility (see location map).
It’s about five minutes to the Middle Ring Road 2 (MRR2) and eight minutes to Duta-Ulu Kelang Expressway (DUKE). It’s also within minutes’ drive to Bukit Bintang, Suria KLCC and Tun Razak Exchange, and an hour to KLIA and Port Klang.
Located along Jalan Enggang, Taman Keramat in Ulu Klang, it’s near the intersection of DUKE and MRR2, and 8.5km away from KLCC.
The location is a mature electronics manufacturing site at the Ulu Klang Free Trade Zone, KL.
AREA Logistics @ Ampang has long standing neighbours, being situated between Texas Instruments Malaysia Sdn Bhd and Japanese wafer manufacturer S.E.H. Malaysia Sdn Bhd.
The 1972-founded Texas Instruments provides semiconductor technologies while S.E.H. Malaysia, since its 1973 inception, has been supplying high quality silicon wafers to the semiconductor industry and is the world’s largest single wafer processing plant in terms of capacity.
The new Ampang project’s surrounding area is able to supply skilled labour. Much of the workforce in the FTZ is indigenous to the Ampang Hulu Klang district.
And with the recent closing of Stats ChipPAC, there is a ready pool of skilled workers released back into the employment market that would provide operators of the new warehouse with excellent hires.
AREA Logistics @ Ampang has a total net lettable area (NLA) of about 1.2 million sq ft and large floor plate of about 320,000sq ft per level.
Its NLA is indeed “mega” for a fulfillment centre even by US sizes, reflecting AREA Management’s very sanguine outlook for the logistics business in Malaysia.
“We plan to offer blocks of 50,000sq ft to 320,000sq ft of space per level,” said LaBrooy.
To another question, he said the green building approach is not taken as a marketing tool but rather a compliance with the needs of their potential clients which will be operating from the warehouse.
“Many of these organisations are MNCs and have in their corporate governance practices the need to occupy buildings that promote sustainability of the environment. Hence, the need for green buildings.”
He said green buildings make sense given the seriousness of the climate change debate that is going on and responsible developers should design their buildings to minimise their carbon footprint.
“We plan to install solar panels on the roof when we can get permission to generate our own electricity for internal use,” he added, noting other green elements include energy efficient air-conditioning, water-saving technologies, and the building alignment with the morning and afternoon sun.
On AREA Management’s target market, he said, “Our clients will largely be derived from those engaged in the coming e-commerce retail revolution. We are expecting strong demand from food distribution companies that demand short delivery times and freshness as a competitive advantage.”
On small and medium enterprises looking to take up space in the new Ampang facility, he said they will need to have a scale of operations that can warrant the need for larger spaces that the facility provides.
E-commerce does provide them that opportunity to scale their businesses quickly and the facility does provide them the product to move to when they are ready.
According to LaBrooy, the facility’s GDV is in the region of RM500 million. Rental and maintenance fee are yet to be determined but will be at competitive market rates. Tenants will get to enjoy security, landscaping maintenance, a gated-and-guarded facility, clean environment and a well maintained facility.
Basics for grade A industrial investments
AREA Management is a private equity firm with offices in Malaysia and Singapore. It launched the AREA Industrial Development Fund (AIDF-1), Malaysia’s first industrial development fund, in November 2015. The Ampang inner city logistics hub is its maiden project.
“The Fund has a life span and so we offer the assets we build to our investors first after which they will be sold to other investment houses such as REITs (real estate investment trusts),” said LaBrooy.
On how good it is as an investment property, he noted:
“It’s the only warehouse of its kind in KL and therefore it will have strong long-term demand and positive rent reversions moving forward.
“Strong demand, excellent location, professional property management and connectivity provide the basics for grade A industrial investments.”