Australian Industrial Horizons

6

LOGISTICS & INDUSTRIAL RESEARCH | INDUSTRIAL HORIZONS

LAND TAKE-UP Land take-up has been capped in recent years given delivery constraints

In response to occupier demand for new facilities, pre-lease and speculative lease activity has been significant since 2020, ultimately leading to diminishing land availability. Institutional demand for land has been substantial as they adopt a build-to core strategy, while more recently, owner occupiers, including data centre operators have become more active in the industrial land market. Between 2020 and 2023, industrial land take-up has averaged over 700 hectares per annum nationally, peaking at almost 900 hectares in 2022 where the Sydney and Melbourne markets saw a sharp upswing in take-up off the back of pre-commitment activity. During this period, pre-lease take-up accounted for 36% of all gross take-up nationally. Further, the average pre-lease size has grown 63% since pre pandemic averages, averaging close to 35,000 sqm between 2021 and 2023. With larger requirements on the rise, it has resulted in significantly compressed development periods in most cases, as one transaction can absorb 10 hectares or more of land. More recently, land take-up volumes have eased. While a pullback in economic activity has largely driven this as business expansion plans have slowed, it also reflects delivery constraints and timing uncertainty due to planning delays in many cities. The latter has resulted in tenant demand being directed to either stay put or relocate to existing facilities. Had development ready land be available in key markets, take-up volumes in 2023 and 2024 would have been higher.

Australian Industrial Land Supply by Status (hectares)

0 100 200 300 400 500 600 700 800 900

2014

2015

2016

2017

2018

2019 2020 2021

2022

2023

2024

Sydney Melbourne Brisbane Perth Adelaide

Note: 2024 is a YTD Q3 Estimate

Australia Industrial Land Years Remaining

Active Land Supply

Total Land Supply

Land Remaining (hectares)

xx

9,087

Average Annual Take-up – Base Case (hectares)

700

700

Years of Land Supply Remaining

xx

13.0