Logistics & Industrial Occupier Market Outlook 2024

Where to for Rents?

Figure 16. 5-Year Net Face Rental Growth Outlook - Top Markets (2024-2029)

Rank

Submarket

City

Total Growth

5-Year CAGR

1

Central West

Sydney

29.0%

5.8% 5.6% 5.2% 5.2% 5.0% 5.0% 4.9% 4.8% 4.5% 4.5%

At a national level, we are forecasting rental growth of approximately 6.0% for 2024 (noting growth of 2.8% has already been recorded in H1 2024) and 4.8% for 2025 . However, infill markets and other land constrained precincts are forecast to outperform, with growth in the order of 8.0% in 2024 and 6.5% in 2025 . Sydney is forecast to be the outperforming city over this period; led by select infill submarkets.

After an unprecedented run on rents over the past three years, a more nuanced narrative is now unfolding. Instead of all cities following a similar growth trajectory, local market dynamics, especially the supply-demand profile for different types and sizes are exerting more influence. At the same time, most new supply additions are at the larger end of the market (15,000 sqm +), and as a result, the smaller end of the market is expected to see more robust rent growth.

2 3 4 5 6 7 8 9

Trade Coast

Brisbane Sydney Sydney

27.8%

South

26.0% 25.8% 24.8% 24.8% 24.5% 23.8% 22.5% 22.5%

West

South East

Melbourne Melbourne

East

North North

Brisbane

Sydney

East

Perth

10

North West

Sydney

Source: Cushman & Wakefield

CAGR: Compound Annual Growth Rate

Incentives are expected to rise over the next 12 months, however, varying widely by market . Select submarkets in Melbourne, Brisbane and Perth are forecast to see incentives rise between 5.0% and 7.5% - a trend we are already seeing play out in anticipation of the pending supply pipeline. Alternatively, Sydney and Adelaide are forecast

to record a more modest rise in incentives. The outlook for Sydney is underpinned by higher pre-commitment levels, while Adelaide is a more private owner dominated market where incentives tend to fluctuate less than in other cities, often at the expense of softer face net rent growth.

Figure 15. Net Face Rental Growth Forecast by City

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Year 1

Year 2

Year 3

Year 4

Year 5

Sydney Melbourne Brisbane Adelaide Perth

Source: Cushman & Wakefield

Of the 25 submarkets that we track, four are projected to record prime rental growth of 25% or more (cumulative) over the next five years, headlined by Sydney’s Central West and Brisbane’s Trade Coast submarkets. For Sydney’s Central West, connectivity has improved greatly following the completion of the WestConnex road project which has underpinned

tenant migration from the South Sydney market. In the Trade Coast’s case, supply over the next two years is limited, and growth more broadly for the Brisbane market will be supported by a period of catch-up to the Sydney and Melbourne markets, where more elevated levels of rental growth have been recorded.

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