Logistics & Industrial Capital Markets 2024 Outlook Report

Will occupier demand remain strong in 2024, and where are rents headed?

Demand for warehouse space has grown significantly since the beginning of 2020, supported by structural tailwinds including e-commerce, a rebound in manufacturing demand and adjustments to supply chains to hold more stock locally. However, in the second half of 2023, there was a slowdown in leasing demand recorded as occupiers reassessed their inventory levels in light of weaker economic conditions.

Coming off record back-to-back years in 2021 and 2022, L&I gross take-up fell in 2023 with just over 3.6 million sqm leased nationally; however, this is also reflective of near-record low vacancy rates, which provided minimal leasing options to tenants looking to relocate or expand. Context is also important here, as take-up in 2023 remained almost 30% above the long-term average and 54% above the pre COVID average (2010-2019).

Figure 31. National Industrial & Logistics Gross Leasing Volumes Forecast (sqm millions)

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

10-Year Average

Pre-COVID Average

Source: Cushman & Wakefield

As we head into 2024, leasing demand is expected to remain buoyant by historical standards and take-up in the order of ~3.0-3.2 million sqm is expected. The catalyst behind another elevated year of demand is the increase in average lease size as occupiers continue to

consolidate into larger footprints and continue to focus on automation adoption, which has rapidly increased the average pre-lease transaction in recent years. In addition, there is potential for over 1.9 million sqm of speculative supply which will add to take-up once leased.

39 | CUSHMAN & WAKEFIELD | LOGISTICS & INDUSTRIAL