Australian Logistics & Industrial Capital Markets Outlook 2025

LOGISTICS & INDUSTRIAL OUTLOOK 2025

INTRODUCTION

Welcome to the Cushman and Wakefield 2025 Logistics and Industrial (L&I) Capital Markets Outlook report. This report will explore the key themes for the year ahead and our outlook for L&I Capital Markets in light of the current macroeconomic environment.

Australia’s L&I Capital Markets recorded substantial improvements in 2024, evidenced by over 40% year-on year pick-up in investment volumes and increased buyer appetite. The stabilisation of debt costs was the lynchpin behind this improvement, driving improved liquidity and providing greater clarity on where pricing sits. Capital that sat on the sidelines in recent years has become much more active, while there were several new market entrants into the sector, led by capital out of Japan. For 2025, a more dynamic landscape is anticipated against a backdrop of further rate cuts following the 25 basis point reduction in February 2025. The fall in the cash rate represents a pivotal change for capital markets and further market liquidity is expected to follow. Asset values have been reset, and capital now recognises that there is a window of opportunity in the year ahead before a potential yield compression cycle begins. Globally, yields for logistics assets are already compressing in select markets, and there is potential for Australia to follow suit in late 2025, giving rise to a wide range of risk and return opportunities.

The short-term outlook will remain choppy amid broader economic and financial market volatility, although economic green shoots are emerging, including a return to real income growth for consumers and an upward trend of retail sales. However, looking beyond the short-term economic volatility, Australia’s economic fundamentals are expected to continue to outperform comparable markets over the long term, which will have positive impacts on warehouse space requirements and capital flows to the sector. More broadly, the sector continues to benefit from several tailwinds, including increased e-commerce adoption and population growth, while supply and demand fundamentals continue to point to an undersupplied market. This imbalance has the potential to become further pronounced in the