Logistics & Industrial Capital Markets 2024 Outlook Report

Supply is increasing; however, vacancy rates will remain tight and rents will remain elevated At this stage, we are tracking in excess of 3.6 million sqm of supply in 2024, up from almost 2.9 million sqm in 2023. On a speculative basis, there is just over 1.9 million sqm in the pipeline for 2024; however, a large share of which is yet to commence construction and given current planning delays and elevated construction costs, some of this is likely to be pushed into 2025. Ordinarily, supply of this magnitude would trigger a material rise in vacancy rates, similar to what is occurring in the US. However,

approximately 45% of the 2024 pipeline is already committed and while not all of these commitments are tenant expansions which will trigger secondary backfill leasing space, current enquiry on the East Coast is in the order of 2.3 million sqm which will ensure vacancy rates remain well under the market equilibrium of 5.0%. As a result, rental growth is forecast to remain strong in 2024. At a national level, rents are forecast to grow by ~6.0% in 2024, while select infill markets where supply is limited are forecast to record growth closer to 8.5% - 10.0%.

Figure 33. Australian L&I Supply - Speculative vs Design & Construct (sqm millions)

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

Speculative

D&C

Source: Cushman & Wakefield

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