Australian Logistics & Industrial Capital Markets Outlook 2025

LOGISTICS & INDUSTRIAL OUTLOOK 2025

WHY NOW? Following two years of pricing dislocation as L&I yields have reset to adjust for higher funding costs, we are at a turning point in the cycle. The experience from previous cycles indicates that L&I acquisitions made during the bottom of the market provided a 450 basis point premium on average above long-term benchmarks in the following five-year period. In our view, this will remain the case in the next cycle as the sector potentially enters a yield compression cycle in the second half of 2025, which in combination with sustained rental growth, will drive a period of accelerated value growth. However, the next yield compression cycle is expected to be less profound, which may dilute returns compared to previous cycles, yet early movers across the range of risk spectrums will be rewarded.

Forecast Reduction In Rates & Prime Market Cap Rate Compression (Bps) December 2024 – December 2026 Forecast Reduction In Rates & Prime Market Cap Rate Compression (Bps) December 2024 – December 2026

er funding costs, dicates that L&I mium on average her funding costs, ndicates that L&I mium on average a potential yield ental growth, will pectrums will be a potential yield ental growth, will spectrums will be g a 39% increase active. ortunity for tes are cut. g a 39% increase active. e over the next proximately 1.5% compression ortunity for tes are cut. e over the next proximately 1.5% compression e deployed, with sidelines over compression as e deployed, with sidelines over compression as and a rns.

CPI

Cash Rate

Real 10-yr Bond Rate Prime L&I Yield

0

Forecast Reduction In Rates & Prime Market Cap Rate Compression (Bps) December 2024 – December 2026

-20

CPI

Cash Rate

Real 10-yr Bond Rate Prime L&I Yield

-40 0

-60 -20

-80 -40

-100 -60

-120 -80

Australian L&I Prime Capital Value Index -100

350 -120

Forecast Reduction In Rates & Prime Market Cap Rate Compression (Bps) December 2024 – December 2026

Forecast

300

Australian L&I Prime Capital Value Index

250 350

Forecast

200 300

150 250

100 200

50 150

and a rns.

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

100

Prime

Secondary

50

AUSTRALIA L&I OUTLOOK 2025 23 Source: Oxford Economics, Cushman & Wakefield Research 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Prime

Secondary

AUSTRALIA L&I OUTLOOK 2025 23

Source: Oxford Economics, Cushman & Wakefield Research Source: Oxford Economics, Cushman & Wakefield Research