Australian Logistics & Industrial Capital Markets Outlook 2025

LOGISTICS & INDUSTRIAL OUTLOOK 2025

2025 OCCUPIER MARKET OUTLOOK

Occupier market fundamentals remain solid for the year ahead as high commitment levels and paused speculative developments place a cap on vacancy rates. Leasing demand is expected to remain patchy in the first half of 2025 before a more meaningful improvement in the second half of the year, in line with stronger economic growth. Similarly, with an upcoming Federal election in either April or May, consumers will remain cautious as they have in previous election years. Our 2025 forecasts for the occupier market can be summarised as:

DEMAND

VACANCY

The national vacancy rate is forecast to rise further over the next six months, averaging between 3.0%- 3.5% by mid-2025. However, easing supply in the second half of the year in several major submarkets, including Melbourne’s West, is expected to see the vacancy rate moderate thereafter.

National gross take-up is forecast to reach approximately 3.6 million sqm in 2025, aided by more pre-lease activity than was recorded in 2024 and a pick-up in demand from the transport and logistics sector.

SUPPLY

RENTAL GROWTH In our view, we believe there is scope for a higher rental growth outlook than the market may be assuming. Our base case is for prime rental growth of 4.5% in 2025, while a more subdued speculative supply pipeline will likely see a pull back in incentives

Supply will be much lower than earlier forecast as around one million sqm is delayed or paused. Nationally, approximately 2.5 million sqm is forecast to come online, with commitment levels of 45% already recorded. The pull-back in supply will result in supply shortages in several precincts throughout 2025.

in markets currently absorbing high levels of supply, including Melbourne’s West.