Logistics & Industrial Capital Markets 2024 Outlook Report

Australia remains attractive to global capital

Greater clarity on pricing will trigger transactional activity

As a result of favourable tailwinds within the L&I sector and with Australia being viewed as a highly attractive and transparent market to deploy capital into, Australia will benefit from an increased flow of funds from offshore markets, particularly from Asia. The weaker Australian dollar is also seen as positive for offshore groups in terms of an entry point into the Australian market.

With interest rates likely to remain flat over the first half of 2024 and cuts expected thereafter, the current yield expansion cycle has run its course. Greater clarity on the outlook for pricing will trigger a pick-up in transactional activity as capital returns in scale.

Rental growth to ease, yet outpace historical benchmarks. Infill to outperform

Pricing premiums for portfolios expected to re-emerge

Pricing premiums for scale were not evident in 2023; however, as capital re-enters the market in 2024, premiums for portfolio opportunities are expected to re-emerge. New offshore capital sources looking to enter the Australian market have flagged their intention to build scale quickly, and both on-market and off-market portfolio opportunities will be highly pursued in 2024.

Rental growth in 2024 is forecast to ease from the 20%+ levels recorded over the past two years as a pick-up in supply will facilitate additional leasing options to prospective tenants. However, a two-speed market will emerge, and infill precincts where supply will remain low will outperform. At a national level, rents are forecast to grow by ~6.0% in 2024, while select infill markets are forecast to record growth closer to 8.5% - 10.0%.

CAPITAL MARKETS 2024 OUTLOOK | 2