Logistics & Industrial Capital Markets 2024 Outlook Report

What trends will drive future growth?

The events of recent years, including the rapid growth of e-commerce and a focus on supply chain resilience and automation, have transformed the L&I sector. In tandem with broader trends such as rapid population growth, urbanisation, and Australia’s position within the Asia Pacific region, the largest and fastest growing region in the world, highlights the future growth potential of the sector. These tailwinds over the long term will amplify the demand for warehouse space and, in turn, will continue to lead to a large re-weighting of capital towards the sector. As a result of these structural tailwinds, historical benchmarks are no longer as relevant for the sector. Population Growth Based on our analysis of population-driven demand over the next decade against the known supply pipeline, by 2033 there will be an estimated cumulative shortfall of warehouse space in the order of 10 million sqm.

While additional supply beyond our current estimates will be brought online, based on the current experience where there are significant planning and servicing delays across the market, it is unlikely that enough supply will come online to satisfy demand. Given a shortage of industrial land, urbanisation has led to the development of multi-level warehouse facilities, particularly in the Sydney market. At present, there is over one million sqm of multi-level warehouse space in the pipeline at various stages, with the first facility of this kind, Goodman’s 45 Burrows Road, Alexandria development (AXIS), reaching completion in late 2023. The prevalence of multi-level warehouse facilities will continue to transform infill industrial markets as developers look to maximise their underlying land value.

Figure 19. National Cumulative Shortfall of Warehouse Stock Required

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

-10,000,000 -9,000,000 -8,000,000 -7,000,000 -6,000,000 -5,000,000 -4,000,000 -3,000,000 -2,000,000 -1,000,000 -

Source: ABS, Oxford Economics, Cushman & Wakefield

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