High-tech industrial park takes off at Essendon airport

Local businesses that require last-mile services face the twin challenges of a dispersed population and high costs. “You need scale and density to do this [last-mile] Otherwise your costs will kill you,” Miller said.


The cost of the last leg of shipping packages and parcels from warehouses to homes — effectively the “last mile” — accounts for about 28% of the total cost of getting goods to consumers, she said.

Service providers such as Australia Post and FedEx have raised fees by 4.5 per cent and changed package weight thresholds, which, combined with rising fuel costs, could add between 9 per cent and 13 per cent to last-mile delivery costs this year.

Mr Miller said the industry was struggling to find key locations within a 20-minute drive of most of the population in greater Melbourne.

With the exception of Amazon, which is building out its own delivery network, most businesses cannot afford to run dedicated last-mile centers and instead use parcel and postal services to deliver to customers.

“The challenge for retailers is that consumers are constantly switching back and forth between going to the store and ordering online. Retailers need to juggle both, which adds complexity to their supply chains,” she said.

Pihan said the new industrial area would eventually be worth $500 million, adding significantly to Essendon Field’s current valuation of $1.2 billion.

The business park is also considering complementing a successful DFO retail complex on another 10ha at the airport, targeting alternative retail categories such as aftermarket automotive, baby, pets, outdoor and adventure.

It also plans to build three more office buildings in the wing, but won’t be building any speculatively in the current market. “We’re reluctant to designate office buildings because there’s vacancy in the city. We’ll see how these shifts in work patterns stabilize over the next few years,” Pihan said.

The business park is seeking to further delay the community consultation process on its draft 2019 master plan – which has been submitted to the government – as nearby Melbourne Airport makes changes to its third runway, which will affect the Essendon runway flights and noise.

“We have written to the minister asking for a modest extension of another six months or so,” he said.

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