Logistics & Industrial Occupier Market Outlook 2024

Introduction

Key Outlook Summary

Welcome to Cushman & Wakefield’s Australian Logistics & Industrial (L&I) Occupier Market Outlook report. This report unpacks our view on the direction of the occupier market, including demand, vacancy and rents, as well as the trends that influence demand going forward.

01 Warehouse gross take-up is expected to total 3.0-3.2 million sqm in 2024, before picking up to 3.5-3.7 million sqm in 2025.

02 Demand over the next 12 months will be underpinned by everyday consumption and sector structural trends including e-commerce, while leasing demand from businesses tied to cyclical spending is expected to pick up in 2025, in line with increased levels of consumer consumption.

Following three years of unprecedented growth, demand for warehouse space has returned to normalised levels over the past six months, reflecting broader economic conditions, rising debt costs, and stickier-than-expected inflation. Notably, this has resulted in some occupiers taking a more cautious approach in committing to new space, worsened by uncertainty surrounding inventory management levels. Notwithstanding this, demand remains well above pre-pandemic benchmarks, and stems from a broader pool of occupiers.

Demand drivers such as increased e-commerce adoption, a focus on supply chain optimisation and resiliency, population growth, and the continued investment in transport infrastructure will continue to support leasing demand, while the pick-up in economic growth in 2025 will underpin demand from more discretionary warehouse occupiers.

03 Despite the increase in speculative supply, high pre-commitment levels means vacancy rates in all cities will remain under the market equilibrium of 5.0% over the next 12-months.

04 Rental growth is forecast to continue to outpace historical benchmarks, with growth of approximately 6.0% forecast for 2024 and 5.0% for 2025. Land-constrained markets where supply is more limited are forecast to see growth rates in excess of this. 05 Notwithstanding a 70% jump in rents since 2020, occupiers are increasingly using real estate as a lever to help control other costs. This will continue to drive demand for well-located facilities where transport cost savings can be achieved. In most cases, occupiers are willing to pay a higher rent if it facilitates cost savings in other areas of the supply chain such as outbound logistics costs. 06 Over the next few years, increased automation and technology adoption will support leasing demand in greenfield markets and those with pre-commitment availability. This will be driven by the bespoke needs of the end user as automation is more challenging to implement in existing facilities.

Lead Authors

Luke Crawford Head of Logistics & Industrial Research – AUS Luke.Crawford@cushwake.com +61 421 985 784

David Hall National Director Head of Brokerage

Logistics & Industrial – ANZ David.J.Hall@cushwake.com +61 428 242 410