Logistics & Industrial Occupier Market Outlook 2024

Occupier Demand - Where is it Heading?

Figure 4. National L&I Gross Leasing Volumes Forecast (sqm millions)

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it remains well above the pre-COVID average (2010-2019) of just under 2.3 million sqm per annum. From 2025, gross warehouse take-up is expected to pick up further to approximately 3.5-3.7 million sqm , led by: • An improvement in land availability in select markets, including Sydney. • A pick-up in economic growth which will provide support to business expansion plans. • The lag impacts from the current record level of population growth. Gross take-up also mirrors the speculative development pipeline as occupiers gravitate towards newer buildings and focus on efficiencies. Speculative supply for of 2024 is set to total approximately 1.7 million sqm, which will boost take-up once these facilities are leased. However, some of this movement will trigger backfill leasing options, which will mute net absorption figures.

After an unprecedented period of demand, gross warehouse take-up has slowed in 2024, with approximately 1.2 million sqm leased so far in the year (to Q2 2024), which is well below the levels recorded at the same point over the past three years. The slowdown in take-up has stemmed from two factors: • Low vacancy levels limiting the expansion plans of some occupiers. • The current economic environment as occupiers take a more cautious approach to their long-term real estate strategy. Further, the rapid growth in rents has meant that occupiers are reluctant to commit to a larger facility without having greater clarity on their inventory management needs, which is proving challenging given patchy levels of consumer consumption and continued supply chain disruption. Our modelling shows that warehouse demand (gross take-up) of approximately 3.0-3.2 million sqm is expected for 2024 . While this level of take up is below the levels recorded in recent years,

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

2010-2023 Annual Average

Source: Cushman & Wakefield

Figure 3. Impacts of Population Growth and E-commerce on Warehouse Demand

Source: ABS, NAB, Oxford Economics, Cushman & Wakefield

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