Australian Industrial Horizons

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LOGISTICS & INDUSTRIAL RESEARCH | INDUSTRIAL HORIZONS

CURRENT CAPACITY Active, or development ready land supply is limited across the country, which has supported land value rates at a time when yields have increased by up to 200 basis points

Australian Industrial Land Supply by Status (hectares)

Nationally, our analysis has identified just over 9,600 hectares of vacant industrial land supply, led by Sydney and Melbourne which collectively account for 63% of this total. However, in reality, a significant portion of this land is not considered active land supply, as it cannot support industrial development in the short term (within the next two years) due to constraints such as the need for infrastructure or other servicing requirements. Based on the assumptions highlighted below, we have identified 3,520 hectares of active land supply. This figure is gross and does not consider land that will be lost for transport corridors, riparian corridors, local roads, lot fragmentation and topography. In addition, a large share of this land is constrained by the current ownership structure, which will limit the ability of the sites to be developed in the future. Considering these constraints, it is estimated that active land supply owned by developers is closer to 2,400 hectares. Ultimately, this highlights the undersupply of development ready industrial land across the country. Population growth alone over the next decade will underpin demand for 3,200 – 4,000 hectares of land. While there is potential for additional land to be zoned during this period, this will prove more challenging given the current federal and state government focus on delivering more housing while markets like Sydney provide a limited scope of additional land supply beyond the Aerotropolis. Methodology/Definitions • Industrial land: To understand the quantum of industrial land supply, we analysed all vacant land that is appropriately zoned for industrial use. We then removed lots below one hectare (unless smaller lots were under one ownership) as lots below this range are not viable for development of scale. • Site viability: We then evaluated each individual vacant lot in order to remove sites that were considered undevelopable, which includes sites that had environmental constraints such as flooding or topography challenges which would make development unfeasible. The remaining sites were used as a baseline for our analysis • Active v inactive land supply: The remaining lots were then grouped into one of two categories – active or inactive supply. Active land supply are lots that are considered development ready as it is either currently serviced or likely to be serviced within the next two years. Inactive land supply represents the balance of land supply and forms part of the longer-term land pipeline.

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Sydney

Melbourne

Brisbane

Perth

Adelaide

Active Land Supply Inactive Land Supply