Australian Logistics & Industrial Capital Markets Outlook 2025

LOGISTICS & INDUSTRIAL OUTLOOK 2025

2025 INVESTMENT STRATEGIES

CORE

VALUE ADD

There will remain attractive opportunities across the

Favourable repricing dynamics are expected to emerge for core assets in 2025 as both interest rates and the risk-free rate move lower, driving greater capital appetite. Unlike the last cycle, when yield compression dominated returns, returns are set to be more evenly balanced in the next cycle. RECOMMENDATIONS Target longer WALE assets linked to structural themes, including facilities with defensive-based covenants. This includes assets where tenants are embedded in basic needs, including supermarkets, cold storage and other food-related occupiers. In previous cycles, these assets have proven to offer a resilient income story. During the last cycle, geography gave way to broader sector growth as the dominant driver of performance, given the sharp rise in e-commerce. However, the new cycle is expected to shift the focus back to geography and real estate fundamentals, given the variance of local supply and demand dynamics across each market.

market to pursue higher returns through refurbishment or asset repositioning and such strategies could deliver mid to high teen returns. Risk under this strategy remains well mitigated as vacancy levels remain well below the market equilibrium. Unlike recent years, supply is expected to thin in 2025 and 2026, particularly on the speculative development front, which will create pockets of opportunity for capital to deliver refurbished product to supply constrained markets. RECOMMENDATIONS Target urban infill locations where assets can be repositioned via capex/refurbishment to drive value and rental uplift. This could include meeting higher ESG credentials, as the average age of stock in infill locations is now over 40 years, while just 8% of current stock was built after 2010