Australia's Logistics and Industrial Supply Pipeline

VACANCY RATES REMAIN SUPPORTIVE OF MORE SUPPLY

Much like the office sector currently, as more supply is added to the market, there will be a flight to quality as occupiers have more options available to them. Given a focus on operational efficiencies, tenant demand is strongest for newer facilities which offer higher clear heights, wider column spacing, more loading docks, and ample car and trailer parking. Highlighting this, over the past four years, 49% of new leasing transactions nationally occurred within facilities built since 2020, although this represents just under 10% of current stock nationally.

Vacancy rates have edged higher in 2024 and currently sit at 2.0% nationally; however, they remain well below where they sat at the end of 2019 across all submarkets. In our view, the market equilibrium sits at 5.0%, although this can vary from market to market. While some supply earmarked for 2025 is likely to be delayed, current vacancy rates remain supportive of new development. Over 5.0 million sqm of new supply would need to be added for the vacancy rate to reach 5.0% (excluding backfill additions to vacancy).

Vacancy Rate by Submarket, Q2 2024 vs Q4 2019

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

West Outer West

Central West

North West

South West

South North North East

South East

West Trade Coast

North South West North South East

Inner North

West South Outer North

Sydney

Melbourne

Brisbane

Perth

Adelaide

Q2 2024 Q4 2019

Source: Cushman & Wakefield Research