Australian Logistics & Industrial Capital Markets Outlook 2025

CUSHMAN & WAKEFIELD | 7

CORE PLUS

DEVELOPMENT/ OPPORTUNISTIC A combination of falling debt costs and a moderation of construction costs will create pockets of opportunity where project feasibilities can be supported. Notwithstanding this, current land values mean economic rents in excess of $250/sqm are required in markets such as Western Sydney, making development feasibilities challenging. RECOMMENDATIONS There is a window of opportunity in several markets, including Outer Western Sydney and Melbourne’s West, to capitalise on a period of planning and or servicing uncertainty. There exists many tenants unable to meet expansion plans due to these constraints, yet owners of sites who can compete in the current development cycle can leverage this demand via a pre commitment, thereby de-risking the site.

Core plus strategies have been the dominant play in recent years as groups look to extract alpha, and this is expected to remain the case in 2025. The main focus of this strategy stems from the ability to capture positive rent reversion, and while a large share of this growth has been captured at market review dates, an analysis of REIT re-leasing spreads shows that many assets remain under rented, some as high as 50%. While core plus assets may present some operational or leasing risks, these issues can be mitigated through active management strategies. RECOMMENDATIONS Target land-constrained markets where the delivery of supply is challenging, which will not only support the initial rental uplift from growth already recorded but also future rental outperformance.