Logistics & Industrial Capital Markets 2024 Outlook Report

Where does current pricing sit, and what does 2024 look like?

In 2023, 115 basis points of prime yield softening was recorded at a national level, largely reflective of the outward movement of debt costs, which are now sitting above 6.0%. Strategies to acquire infill land holdings have also meant there was minimal spread between prime and secondary yields in select locations. This has been most evident in Sydney, where the spread in some precincts is as low as ~60 basis points and compares to the long-term average of 130 basis points.

While there were numerous transactions with initial yields sitting under 5.0% in 2023, core market yields currently sit closer to 5.50% to 6.25%, depending on the market once market rents are factored in. In the absence of rental growth, this would have ordinarily resulted in a ~30% decline in asset values since the outward movement in yields began in early 2022. However, since the beginning of 2022, prime yields have jumped 50.4% nationally, which has assisted in maintaining asset values to some degree.

Figure 28. L&I Prime Core Market Yield Range by City (Q4 2021 vs Q4 2023)

7.00%

6.50%

6.00%

5.50%

5.00%

4.50%

4.00%

3.50%

3.00%

Perth

Perth

Sydney

Sydney

Brisbane

Brisbane

Adelaide

Adelaide

Melbourne

Melbourne

Q4 2021

Q4 2023

Source: Cushman & Wakefield

31 | CUSHMAN & WAKEFIELD | LOGISTICS & INDUSTRIAL

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