AUSTRALIA LOGISTICS & INDUSTRIAL RESEARCH
THE OCCUPIER RESET AUSTRALIA'S LOGISTICS OCCUPIER MARKET OUTLOOK
Q4 2026
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INTRODUCTION Why the next occupier cycle will be defined by optimisation rather than expansion.
The upcoming occupier cycle will be shaped less by outright expansion and more by optimisation. While vacancy, demand, supply and rents remain central to occupier decision-making, businesses are increasingly assessing their property footprint through a broader operating lens. Persistent cost pressures, labour constraints and supply chain uncertainty are increasing the focus on productivity, with real estate being assessed for its ability to reduce transport and labour costs, increase storage capacity, support automation and strengthen network resilience. This shift is already evident in leasing behaviour. National leasing activity has remained active, but net absorption has been more subdued, indicating that a growing share of transactions is being driven by relocation, consolidation, upgrading, space rationalisation and operational improvement rather than pure footprint growth. For occupiers, the key question is no longer simply whether more space is needed, but whether the existing portfolio is fit for the next phase of the business. As the cost of inaction becomes more apparent, occupiers need to make property decisions earlier and as part of their broader supply chain strategy, driving greater focus on network optimisation and facilities that deliver long-term operational efficiencies. For landlords and developers, this reinforces the importance of building functionality, power capacity, clear height, ESG performance, yard configuration and automation readiness in helping occupiers reduce whole-of-business costs.
AUTHORS
Luke Crawford Head of L&I Research, AUS Luke.Crawford@cushwake.com
Tony Iuliano International Director, Head of L&I, ANZ Tony.Iuliano@cushwake.com David Hall National Director, Head of Brokerage, L&I, ANZ David.J.Hall@cushwake.com
Morgan Evans National Director, Tenant Advisory, L&I, ANZ Morgan.Evans@cushwake.com
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FIVE THEMES THAT WILL DEFINE 2027 Efficiency, consolidation and capability, not expansion, will shape leasing decisions over the next 12 months.
1. EFFICIENCY IS REPLACING EXPANSION
2. CONSOLIDATION ACCELERATES
3. AI IS BEGINNING TO INFLUENCE REAL ESTATE
4. FLIGHT TO QUALITY CONTINUES
5. OCCUPIER CHOICE TO NARROW
Occupiers are expected to remain focused on improving capacity and productivity without materially increasing their property cost base. Leasing demand may strengthen in 2027, but much of it will come from businesses upgrading or reconfiguring existing networks rather than adding floorspace.
Better buildings, higher clearances and automation are enabling occupiers to do more with less space. As businesses review their networks, consolidation is expected to remain a significant driver of leasing decisions in 2027.
AI is unlikely to transform warehouse networks in 2027, but it will increasingly influence how occupiers plan for future operations. Greater automation and more intensive use of facilities will place added emphasis on power, connectivity, building configuration and flexibility.
Demand is expected to remain concentrated in prime facilities that offer greater capacity and operational efficiency. This will continue to widen the performance gap with secondary stock, even if overall occupier growth remains below the levels recorded earlier in the cycle.
Occupiers still have choice in several markets, but lower speculative supply are anticipated to narrow that choice from 2027, particularly for better quality space.
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MARKET FORECASTS FOR 2027 A slow recovery in demand meets a thinning supply pipeline, setting up tighter conditions through 2027.
4.0%
3.9%
~60%
12%
1.9m sqm
OF SPEC PIPELINE IN THREE SUBMARKETS
PRE-LEASE SHARE OF TAKE-UP, YTD 2026
PRIME RENTAL GROWTH, 2027
VACANCY PEAK, Q4 2026
NET ABSORPTION, 2027
RENTAL GROWTH BROADENS BEYOND SUPPLY- CONSTRAINED MARKETS Prime rents to increase by 4.0% in 2027, with select markets expected to see growth of closer to 4.5%.
VACANCY BEGINS TO TIGHTEN
SPECULATIVE SUPPLY TO FALL
SLOW RECOVERY IN NET ABSORPTION
PRE-LEASE ACTIVITY IMPROVES
National vacancy is forecast to peak at around 3.9% in Q4 2026 before declining towards 3.0% by the end of 2027, although conditions will vary widely by submarket.
Speculative completions in 2027 are forecast to reach their lowest level since 2021, with three submarkets accounting for almost 60% of the pipeline.
National net absorption is forecast to reach 1.9 million sqm in 2027, supported by a recovery in Melbourne and the completion of pre-committed facilities that are expansionary.
As occupier requirements improve and existing prime options are absorbed, a greater share of large requirements is expected to move towards pre- lease solutions.
Source: Cushman & Wakefield Research
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RECOMMENDATIONS Practical steps for occupiers, developers and investors as conditions begin to shift.
OCCUPIERS
DEVELOPERS & INVESTORS
ASSESS THE WHOLE OPERATING COST Compare facilities on transport, labour, storage capacity and occupancy cost. A higher rent may be justified where the building or location reduces costs elsewhere in the network. BUILD THE RELOCATION PAYBACK CASE EARLY Account for fit-out, racking, rent overlap and downtime alongside expected operating savings. Test how landlord support and the timing of incentives affect the upfront cost.
DESIGN AROUND OPERATIONAL CAPABILITY Prioritise specifications that increase capacity and throughput, including clear height, yard configuration and automation readiness.
01
01
ADDRESS THE COST OF OCCUPIER MOVEMENT Flexible handover, early access, racking support and make-good assistance can help occupiers overcome the upfront cost of relocation.
02
02
REVIEW THE NETWORK BEFORE REPLACING A LEASE Test whether fewer, more capable facilities could meet current requirements and provide capacity for growth. A renewal may preserve an inefficient network.
MATCH DEVELOPMENT TO LOCAL DEMAND Test speculative projects against available competing space and active requirements. Several key markets now have a shortage of options above 15,000 sqm, while more broadly the sweet spot for demand remains in the 3,000-10,000 sqm size bracket. A pre-lease may provide a clearer path to commencement. ASSESS SECONDARY ASSETS AGAINST PRIME COMPETITION Review whether upgrades can close gaps in building function and operating performance. Assets that cannot meet changing requirements may face longer vacancy and greater incentive pressure.
03
03
PLAN AHEAD FOR SPECIFIC REQUIREMENTS Suitable options can be scarce even when headline vacancy is elevated. Allow time to assess optimal requirements well before an existing lease expires.
04
04
CONTENTS Four chapters tracing how occupiers are resetting their real estate decisions, from current conditions to the outlook for 2027 and beyond.
01 STATE OF PLAY
02 STRUCTURAL & EMERGING
03 CHANGING OCCUPIER BEHAVIOUR
04 WHAT HAPPENS NEXT
DEMAND DRIVERS PAGE 10
PAGE 07
PAGE 16
PAGE 23
01 STATE OF PLAY
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01 STATE OF PLAY
01 STATE OF PLAY
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
CURRENT OCCUPIER MARKET SNAPSHOT National and capital city conditions to Q3 2026.
NATIONAL
2.0% Prime annual rental growth
3,399,355 sqm YTD 2026 gross take-up
767,386 sqm YTD 2026 net absorption
3.7% Q3 2026 vacancy rate
SYDNEY
MELBOURNE
BRISBANE
ADELAIDE
PERTH
YTD 2026 gross take-up 1,001,450 sqm Q3 2026 vacancy rate 3.9% Q3 2026 average prime rent $259/sqm
YTD 2026 gross take-up 1,132,203 sqm Q3 2026 vacancy rate 4.4% Q3 2026 average prime rent $162/sqm
YTD 2026 gross take-up 869,501 sqm Q3 2026 vacancy rate 3.1% Q3 2026 average prime rent $190/sqm
YTD 2026 gross take-up 122,511 sqm Q3 2026 vacancy rate 2.6% Q3 2026 average prime rent $154/sqm
YTD 2026 gross take-up 273,690 sqm Q3 2026 vacancy rate 2.2% Q3 2026 average prime rent $173/sqm
Source: Cushman & Wakefield Research
01 STATE OF PLAY
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THE OCCUPIER MARKET IN FOUR CHARTS Leasing, net absorption, vacancy and rents across the national market to Q3 2026.
Leasing remains active, but pre-lease demand is subdued National gross take-up by lease type (sqm millions)*
Sydney and Brisbane lead net absorption; Melbourne remains weak YTD 2026 net absorption by city (000 sqm)
400
0.0 1.0 2.0 3.0 4.0 5.0
315
304
300
200
100
100
46
2
2020
2021
2022
2023
2024
2025
2026*
0
Sydney
Melbourne
Brisbane
Adelaide
Perth
Existing
Speculative
Pre-lease
Availability has risen, although it is highly bifurcated by market and size Vacancy rate by city, Q3 2026 vs 15-year average
Rental growth has slowed as occupiers digest a 90% increase since 2019 National prime weighted net face rent ($/sqm)
$240
0% 1% 2% 3% 4% 5% 6% 7%
$204 $207
$197
$185
$200
$151
$160
$124
$112
$110
$120
Sydney
Melbourne
Brisbane
Perth
Adelaide
National
$80
2019
2020 2021
2022
2023
2024 2025
2026
Q3 2026
15-year average
Source: Cushman & Wakefield Research. *2026 data is to Q3 2026.
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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02 STRUCTURAL & EMERGING DEMAND DRIVERS
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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STRUCTURAL DRIVERS EXPAND THE DISTRIBUTION TASK Population, e-commerce and inventory requirements increase the volume moving through logistics networks, but economic conditions and capacity utilisation will determine how much additional space is required.
Population growth continues to expand the task Australian population (million persons)
E-commerce remains below more mature markets E-commerce penetration rate by market
Population growth and e-commerce continue to expand the volume of goods moving through Australian supply chains. However, recent experience demonstrates that structural demand does not automatically translate into additional warehouse take-up. The timing and scale of future space requirements will depend on consumer spending, business confidence, inventory decisions and how effectively occupiers utilise existing capacity.
25.0 26.0 27.0 28.0 29.0 30.0
0% 10% 20% 30% 40% 50%
China South Korea
United Kingdom
United States
Global Average
Australia Japan
2020 2022
2024 2026
2028
2030
Actual
Forecast
Australia, current
Australia, penetration by 2027
Inventory levels remain above pre-pandemic norms Australian inventory levels by sector (indexed to 100 in June 2016)
Medium term structural demand remains Supply vs demand drivers, 2025 to 2030 (sqm millions)
4 6 8 10 12 14
170
150
4.7
130
8.0
6.9
110
0 2
90
Supply
Population + e-commerce demand
2016 2018
2020
2022
2024
2026
Manufacturing
Retail trade
Wholesale trade
Supply
Population driven
E-commerce driven
Source: ABS, Oxford Economics, NAB, Australia Post, Cushman & Wakefield Research
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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CONSUMER SPENDING REMAINS A KEY WATCHPOINT Structural demand drivers remain intact, but the pace of occupier expansion in the near term will depend on household spending.
Consumer-facing sectors account for approximately 70% of warehouse leasing activity, making household spending an important cyclical influence on demand. While spending has remained relatively resilient, higher interest rates, persistent cost-of-living pressures and a softer housing market are expected to constrain household budgets into 2027. Housing conditions are particularly relevant to discretionary retail categories. Historically, there has been a strong relationship between house price growth and discretionary retail sales approximately 12 months later. Recent housing weakness therefore points to a risk of softer spending growth across categories such as furniture, electronics and household goods. As a result, occupier demand from discretionary retail categories is expected to remain selective in the near term. While structural demand drivers remain supportive, the timing and strength of any recovery in warehouse demand will ultimately depend on household spending and business confidence.
Retail sales growth to moderate in 2027 Australian retail sales, annual growth
Housing weakness becomes a retail headwind Annual growth: house prices (12-month lead) vs discretionary retail sales. Historical correlation of 0.84, 2010 to 2026.
10%
40%
35%
8%
30%
25%
20%
6%
15%
10%
4%
5%
0%
2%
-5%
-10%
-15%
0%
2013 2016
2019
2022
2025
2028
House prices, 12-month lead Discretionary retail sales
Dashed lines show forecasts
Actual
Forecast
Source: ABS, Oxford Economics, Cushman & Wakefield Research
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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DATA CENTRES: A NEW INDUSTRIAL DEMAND DRIVER Australia's data centre pipeline is scaling rapidly. Experience from more mature US markets suggests the industrial demand generated by the ecosystem supporting these facilities could accelerate as the sector develops.
Australia has approximately 330 MW of data centre capacity under construction and a further 2.9 GW planned. Almost 17 GW is at an earlier stage of development. The direct impact on industrial property is already becoming evident, with hyperscale data centre operators acquiring significant tranches of industrial land. However, the construction and ongoing operation of data centres require significant suppliers, contractors, equipment storage and distribution capacity. Ultimately, this will add a new layer of warehouse demand to the sector and the market is already benefiting. In Sydney for 2026, more than 100,000 sqm has been leased to such businesses, and includes commitments to AG Coombs, Parratech and Tate Global.
WHAT CAN THE US MARKET TELL US?
WHAT DOES THIS MEAN FOR AUSTRALIA? Experience in more mature data centre markets
Data centre related industrial leasing, gross take-up (000 sqm)*
demonstrates the potential for broader industrial demand across suppliers, contractors, equipment storage and logistics operations. Australia remains at a much earlier stage of development and the scale and timing of this demand is likely to vary by market.
1,254
+44% year-on-year increase in 2025
871
799
743
Potential industrial demand indicated by mature-market experience (million sqm)
2022
2023
2024
2025
3.0
10.4% of US industrial leasing, 2022 to 2025 (14.4% in 2025)
3.68m sqm of data centre related leasing, 2022 to 2025
1.25m sqm data centre related leasing volume in 2025
2.0
1.0
0.0
Sydney Melbourne Perth Canberra Other
339,000 sqm of industrial leasing associated with each GW of data centre development*
Under construction
Planned
Early stage
*Phoenix, Virginia, Dallas, Atlanta, Austin-San Antonio, Chicago. Applying the relationship observed across six US markets. Source: Cushman & Wakefield Research
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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AI: TRANSFORMATION OR INCREMENTAL CHANGE? AI is unlikely to change warehouse demand requirements overnight, but its effect on productivity and automation could progressively change how occupiers use space.
In the near term, AI is most likely to improve decisions within existing networks. Better forecasting, inventory positioning and routing could help occupiers increase throughput and make more effective use of current capacity. As AI is combined with robotics and warehouse automation, the property implications become more pronounced. Facilities will need sufficient power and connectivity, alongside layouts that support higher volumes of goods moving through the building. Greater efficiency will not necessarily reduce demand for industrial space. Higher throughput could increase the value of well-located, capable facilities, while more flexible inventory flows may eventually change where occupiers need space. Cushman & Wakefield's recent AI Impact Study provides an in-depth analysis of four different scenarios and their impact on the sector.
HOW AI CAN INFLUENCE WAREHOUSE DEMAND
HOW COULD THE IMPACT EVOLVE? NEAR TERM AI-assisted operations Forecasting, routing, inventory positioning and labour optimisation improve how occupiers use existing networks and capacity.
Higher throughput AI-enabled forecasting, inventory
Demand implication Greater need for high-throughput facilities with sufficient docks, yards, staging, circulation and sortation capacity.
01
management and automation could allow occupiers to process greater volumes through their logistics networks.
PROPERTY NEEDS
Staging capacity Sortation capacity Efficient circulation
More docks
Larger yards
USE SPACE BETTER
MEDIUM TERM Automation at scale Greater adoption of robotics and automated systems increases requirements for power, connectivity and building capability.
More dynamic networks Real-time optimisation could allow inventory and freight flows to be continually redirected across an occupier's network as demand changes.
Demand implication Strategic network locations become more valuable, particularly facilities providing access to multiple customers, markets and transport routes.
02
LOCATION NEEDS
Customer reach
Transport access
Market proximity
Optionality
REQUIRE MORE CAPABLE SPACE
LONG TERM Network transformation More dynamic inventory positioning, capacity utilisation and network optimisation, potentially changing where and how occupiers require space.
Greater automation AI could accelerate the adoption and sophistication of robotics, automated storage and retrieval, and other warehouse technologies.
Demand implication Demand increasingly favours automation- ready facilities with sufficient power, connectivity, clear height, floor performance and flexibility.
03
BUILDING NEEDS
Power & connectivity
Clear height
Floor performance
Flexibility
POTENTIALLY RESHAPE NETWORKS
Source: Cushman & Wakefield Research
02 STRUCTURAL & EMERGING DEMAND DRIVERS
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WHAT ARE THE DOWNSIDE RISKS FOR 2027? Our 2027 outlook assumes a gradual improvement in occupier demand and business confidence. However, there are several downside risks to this outlook. Should one or more of these risks materialise, the recovery in occupier demand could be delayed.
01 INTEREST RATES RISE FURTHER
02 HOUSING WEAKNESS BECOMES A MAJOR HEADWIND
03 GEOPOLITICAL UNCERTAINTY PERSISTS
04 DEFERRED DEMAND REMAINS DEFERRED
Persistent inflation could result in further tightening or a slower easing cycle than currently anticipated. Higher borrowing costs would place additional pressure on household spending, business investment and occupier confidence.
A more prolonged decline in house prices could weigh on discretionary consumer spending through the wealth effect. This would impact a broad range of occupiers including retail, wholesale, logistics and housing related manufacturing sectors. A weaker housing market would also likely mean fewer homes are built as developers can’t meet required sales prices to justify development.
An extended Middle East conflict could continue to disrupt global trade flows, energy markets and business confidence. Ongoing uncertainty may encourage occupiers to delay major property decisions and maintain a more cautious approach to network expansion.
A large volume of active requirements have been postponed in 2026. If economic conditions fail to improve, a portion of these requirements may remain on hold, reducing the scale and timing of any recovery in net absorption.
03 CHANGING OCCUPIER BEHAVIOUR
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03 CHANGING OCCUPIER BEHAVIOUR
03 CHANGING OCCUPIER BEHAVIOUR
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THE OCCUPIER RESET: FIVE SHIFTS
01
02
03
04
05
MAINTAINING THE COST BASE IS KEY
RELOCATION DECISIONS ARE INCREASINGLY ABOUT PAYBACK The upfront cost of moving remains a major hurdle. Occupiers are weighing that cost against the transport, labour and operating savings a new facility could deliver.
FLIGHT TO QUALITY IS WIDENING THE PERFORMANCE GAP Demand is concentrating in modern facilities that offer greater capacity and operational capability, while secondary stock is giving back space.
CONSOLIDATION REMAINS A KEY OCCUPIER STRATEGY Higher clearances, improved configuration and automation are enabling occupiers to increase capacity while consolidating operations and reducing network duplication.
LOCATION REMAINS CRITICAL TO OCCUPIER ECONOMICS Occupiers are increasingly assessing location beyond headline rent, with access to customers and the broader industrial network influencing the relative value of different locations.
Occupiers remain reluctant to materially increase their property cost base. Rightsizing, incentives and lease structure are becoming more important in making an upgrade financially viable.
SEE PAGE 18
SEE PAGE 19
SEE PAGE 20
SEE PAGE 21
SEE PAGE 22
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MAINTAINING THE COST BASE IS KEY For many occupiers, the starting point for a relocation is simple: avoid materially increasing the existing occupancy cost base.
HOW OCCUPIERS ARE MAINTAINING THEIR COST BASE
As occupiers approach lease expiry, relocation decisions are increasingly being assessed through the lens of cost neutrality. While a new facility may carry a higher face rent, occupiers are increasingly seeking deal structures that keep occupancy costs broadly aligned with their existing facility during the initial years of the lease. This is placing greater emphasis on how incentives are structured, not simply the headline amount. Front-loaded rent abatement can offset the initial rental increase, providing occupiers with time to transition into the higher cost base and realise the operational benefits of the new facility. With renewal rates above 90% in many locations, the biggest competitor to a new facility is often the occupier's existing building. Deal structures that minimise the initial cost increase can therefore play an important role in making relocation viable.
Front-loaded incentive structures
Rightsizing facility requirements
Lease term optimisation
Concentrating rent abatement in the initial years can minimise the cost increase during the transition period.
A smaller or better-configured footprint can contain the total rental commitment even where the new facility carries a higher rental rate.
Longer terms and phased rental commencement can provide greater flexibility to align occupancy costs with the occupier's transition and payback period.
Same incentive. Lower initial occupancy cost. Illustrative net effective rent ($/sqm) under evenly spread and front-loaded incentive structures
Why it matters
• Protects margins during the initial transition period. • Makes relocation more viable without increasing the headline incentive. • Aligns the incentive with when cost pressure is greatest.
$100 $105 $110 $115
$112 $112 $112
$105 $105 $105 $105 $105
$100
$80 $85 $90 $95
$95
$95
Current Y1
Y2
Y3 Y4 Y5
Y1
Y2
Y3 Y4 Y5
Current facility
Evenly spread incentive
Front-loaded incentive
Assumptions: 10,000 sqm facility in Melbourne's West; $145/sqm net face rent; 27.5% incentive. Front-loaded structure is based on 60% being taken as an abatement in years 1 and 2 and the balance spread over the remaining term.
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RELOCATION COSTS REMAIN A HURDLE Payback is the key: the decision to move is increasingly determined by whether operational savings can repay the upfront cost of relocation.
Building the business case for relocation From upfront cost to payback ($/sqm)
Relocation costs remain one of the biggest barriers to occupier movement. Our analysis indicates gross relocation costs can exceed $140/sqm in markets like Sydney, before allowing for landlord incentives and other forms of support. However, the more important question is whether the new facility can generate sufficient operational savings to justify that upfront cost. Transport efficiency, labour productivity, storage capacity, energy performance, automation and network consolidation can all contribute to the payback. This is shifting decision-making away from a simple lease comparison towards a broader operating model assessment. A higher-rent facility can still make financial sense where it lowers total supply chain costs, improves service levels or enables the business to operate from a more productive footprint.
~70% Early access and/or racking support can remove approximately 70% of the occupier's effective relocation exposure in this scenario, reducing the payback period from 4.2 years to 1.9 years.
$160
$140
$120
$100
$80
PAYBACK PERIOD
$60
4.2 years
$40
$20
$0
Net upfront cost divided by annual operating savings
Gross relocation cost
Incentive Offset/ Landlord Support
Net upfront cost
Annual operating savings
Make-good
New site capex
Goods & equipment transport
Racking
Incremental rent during overlap
Professional fees
Downtime
Assumptions: 10,000 sqm existing and new facility in Sydney; existing gross rent of $265/sqm; new gross rent of $275/sqm; two months' rental overlap during transition; standard racking and basic automation; light works (not a full refit); professional fees equivalent to 2.5% of hard costs; 20% lease incentive; estimated annual operating savings of $22.4/sqm.
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FLIGHT TO QUALITY IS WIDENING THE GAP Occupier demand is increasingly concentrating in modern, highly functional facilities, while older secondary stock is giving back space.
Net absorption is concentrating in prime stock National net absorption by grade, 12 months to Q3 2026 (sqm millions)
The slowdown in occupier demand has not affected all industrial assets equally. While national net absorption has moderated, demand has become increasingly concentrated in prime-grade facilities that better support modern supply chain requirements. Over the 12 months to Q3 2026, prime facilities recorded approximately 2.1 million sqm of positive net absorption, while secondary assets contracted by around 700,000 sqm. In effect, all positive net occupier growth occurred within newer facilities, highlighting a widening performance gap between prime and secondary stock. Greater availability is accelerating this shift. Higher vacancy and stronger incentives are giving occupiers more opportunity to reassess their property requirements and upgrade into facilities better aligned with their long-term operational needs.
WHY ARE OCCUPIERS OPTING FOR BETTER QUALITY STOCK? 01 Greater occupier choice
2.5
+2.1m
Higher vacancy has allowed occupiers to be more selective about the buildings they occupy.
2.0
+1.5m
02
1.5
Narrower effective cost gap Higher incentives have reduced the effective cost differential between modern and older facilities. Better operational performance Modern facilities can offer greater storage capacity, productivity, automation capability and lower operating costs. Future-ready specifications Power, automation readiness, clear height and building configuration are increasingly influencing whether a facility can support future operational requirements.
1.0
03
0.5
0.0
04
-0.5
-0.7m
-1.0
Prime
Secondary
Total
Source: Cushman & Wakefield Research
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CONSOLIDATION REMAINS A KEY STRATEGY As occupiers focus on network efficiency, consolidation can reduce operational duplication while creating a more scalable platform for future growth.
Illustrative consolidation outcomes: Capacity growth without more floorspace
Consolidation remains a key strategy for occupiers seeking to optimise their property networks and improve operational efficiency. By combining operations into fewer, higher-capacity facilities, occupiers can reduce duplication across their networks while creating a more efficient platform for current requirements and future growth. Modern facilities can strengthen the consolidation opportunity through higher clear heights, improved building design
AFTER: CONSOLIDATED NETWORK 1 modern, higher-capacity facility
BEFORE: FRAGMENTED NETWORK 3 facilities, higher duplication
SCENARIO OUTCOMES
No change in floor area 15,000 to 15,000 sqm Cost base remains similar
0%
Pallet capacity increase 18,000 to 22,500
Site A 6,000 sqm $240/sqm
Site B 5,000 sqm $255/sqm
Site C 4,000 sqm $270/sqm
25%
15,000 sqm $240/sqm
rent per pallet position* $211 to $160
-24%
Total floor area
Pallet positions*
Rent per pallet position $211
22,500+ pallet positions*
15,000 sqm
18,000
and greater operational capacity. Depending on the requirement,
operating locations Capacity for current needs and future growth
3 to 1
consolidation may result in a smaller, similar or larger facility. The objective is not necessarily to reduce space, but to combine operations into a more efficient network while providing capacity for future growth.
Rent per pallet position $160
Multiple leases | Duplicated inventory, operating areas and transport | Complex network
ADDITIONAL BENEFITS OF CONSOLIDATION (BEYOND PROPERTY COSTS)
Inventory efficiency Less duplicated inventory across multiple sites, releasing working capital.
Operational efficiency Reduced duplication of labour, equipment and site overheads.
Network efficiency Simpler inventory flows and fewer inter-facility movements while maintaining service levels.
Environmental outcomes Potential reduction in overall energy use and emissions across the network.
*Pallet positions are illustrative and based on typical stacked racking layouts.
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LOCATION VALUE DEPENDS ON WHO YOU NEED TO REACH Customer and warehouse reach reveals significant differences in the positioning of industrial locations.
Customer and warehouse reach within a 30-minute drive
Location requirements vary significantly by occupier. For B2C and high-throughput operations, access to a large customer base can be critical, while B2B occupiers may place greater value on proximity to other industrial facilities and the broader distribution network. The chart compares the share of each city’s population and warehouse stock accessible within a 30-minute drive across selected industrial precincts. It highlights how the balance between customer and warehouse reach varies across locations. Precincts such as Eagle Farm and Silverwater provide strong access to both customers and warehouse stock, while Mascot and Port Melbourne are more customer oriented. Eastern Creek and Huntingwood provide comparatively stronger warehouse reach. Ultimately, the value of a location depends on the occupier’s operating model and who, or what, it needs to reach.
90%
CUSTOMER + NETWORK REACH High population and warehouse reach
NETWORK FOCUSED High warehouse reach, lower population reach
80%
Berrinba
Eagle Farm
Crestmead
Eastern Creek
70%
Huntingwood
Tullamarine
60%
Truganina
Silverwater
50%
Bundamba
Clayton South
Port Melbourne
40%
Marsden Park Minto
Moorebank
Mascot
30%
Dandenong South
Yatala
20%
Somerton
Brendale
10%
LOWER CUSTOMER + NETWORK REACH Lower reach across both measures
CUSTOMER FOCUSED High population reach, lower warehouse reach
0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0% 80.0% % of city population accessible within 30 min drive
Sydney
Melbourne
Brisbane
$175
$250
$350+
CITY
PRIME GROSS RENT ($/SQM)
Source: Cushman & Wakefield Research. Population and warehouse reach are measured as the share (%) of each city’s total population and warehouse stock accessible within a 30-minute drive.
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
04 WHAT HAPPENS NEXT
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CUSHMAN & WAKEFIELD | 24
AUSTRALIA'S OCCUPIER MARKET OUTLOOK
HOW MUCH SPACE WILL OCCUPIERS NEED? Net absorption is forecast to recover from mid-2027 as deferred requirements progress and pre-committed facilities are completed.
Downside risk: Weaker trading conditions or
Recovery in net absorption from 2027 Logistics & industrial net absorption by city (sqm millions)
Net absorption is expected to remain subdued over the next six months before recovering from mid-2027. The completion of pre-committed facilities, which represent expansion space, is the catalyst behind the increase. Notable examples include Kmart and Amazon, both of which are taking on more space at their new distribution centres in Sydney and Melbourne respectively. A large volume of active requirements has been put on hold in 2026, while others have undertaken short-term renewals. Deferred requirements provide a potential source of future activity, although some may remain on hold, convert to renewals or be offset by backfill released through relocation and consolidation. National net absorption is forecast to rise from almost 1.1 million sqm in 2026 to approximately 1.9 million sqm in 2027. While solid relative to recent years, the 2027 forecast remains below the 10-year average. From 2028 to 2031, net absorption is projected to average close to 2.9 million sqm annually. National gross take-up is expected to average around 4.0 million sqm per annum over this period.
prolonged rate pressure could delay the recovery and keep net absorption in 2027 closer to 2026 levels.
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
2016 2017 2018 2019 2020 2021
2022 2023 2024 2025 2026F 2027F 2028F 2029F 2030F 2031F
F = forecast
Sydney
Melbourne
Brisbane
Perth
Adelaide
10-year annual average
Net absorption forecast to rise from almost 1.1 million sqm in 2026 to approximately 1.9 million sqm in 2027.
From 2028 to 2031, net absorption is projected to average close to 2.9 million sqm annually.
Source: Cushman & Wakefield Research
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
WHO WILL TAKE THE SPACE? Demand will become more selective as occupiers reshape networks around cost, resilience and service requirements. Collectively, the sectors below have represented more than 90% of warehouse demand since 2020.
TRANSPORT & LOGISTICS
DATA CENTRE ADJACENT
RETAIL TRADE
CONSTRUCTION
MANUFACTURING
WHOLESALE TRADE
• Existing project delivery • Selective housing and infrastructure-related requirements • Demand to remain project- specific rather than broad- based • Warehousing combined with yard, workshop or trade-counter space • Brisbane a focus market
Potential 2027 demand catalyst
• 3PL contract wins • Expansion of Asian 3PLs • Continued outsourcing of logistics functions
• Network recalibration to balance inventory resilience against working capital discipline
• Investment in domestic capacity • Supply chain resilience • Automation and facility upgrades
• Data centre development • Growth in specialist contractors and suppliers • Equipment and critical parts storage
• Population-led
consumption growth • Inventory expansion • Need to improve customer reach
Network response
• Consolidation into fewer, larger hubs, supported by infill nodes where service levels justify the cost
• Rebalancing between large regional distribution centres and smaller facilities closer to customers • Greater automation to lift throughput and offset labour costs • Locations that optimise population reach and delivery cost, rather than simply lower rent • Less expansionary growth anticipated given cost of living pressure and the flow-on of house price declines • Facility decisions will be based on total fulfilment cost and customer reach, rather than rent alone
• Migration from older
• Clustering around
• Consolidating fragmented networks to reduce duplication, improve inventory visibility and control occupancy costs
legacy assets into power- enabled facilities that support automation and higher productivity
established data centre precincts, creating demand beyond the campuses themselves
Where demand will land
• Modern, scalable facilities with labour depth and
• Functional secondary facilities • Industrial outdoor storage near growth and infrastructure corridors
• Power-enabled sites • Outer ring focus given lower transport needs
• Sites close to major
• Functional middle and
Sydney and Melbourne data centre clusters
outer ring facilities offering a balance between customer reach and total occupancy costs
access to multiple motorway corridors
Occupier implication
• Facility decisions to be
• Flexibility will be critical across layouts, yards and lease structures
• Power, planning and fit-out requirements will narrow options and extend lead times
• Given demand will be geographically
• Functionality and
driven by contract tenure, automation payback and network-wide cost savings
affordability will be prioritised without materially increasing distribution costs
concentrated, businesses will require earlier property decisions
• Selective and cost-
conscious approach to leasing decisions
Source: Cushman & Wakefield Research
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
SUPPLY INCREASINGLY DEPENDS ON COMMITMENT Around a third of supply over the next 15 months is subject to a pre-commitment, limiting the risk of broad-based oversupply.
Potential supply, Q3 2026 to Q4 2027 National L&I supply pipeline (sqm millions)
Following a record wave of development, supply conditions are normalising. Higher construction costs, tighter funding conditions and longer planning timeframes are shifting development towards a more disciplined, pre- lease-led approach. From Q3 2026 to Q4 2027, there is potential for almost 3.1 million sqm. However, approximately 1.1 million sqm will only be activated following a pre-commitment. Excluding this space, the pre-commitment rate for supply over the next 15 months stands at 56%. The uncommitted speculative pipeline is forecast to total around 865,000 sqm over the period, well below the levels recorded in recent years. As a scenario, even if all this space were to become available now with no absorption, the national vacancy rate would only increase to 4.4%.
3.1m sqm potential supply, Q3 2026 to Q4 2027
3.5
3.0
1.11m
2.5
56% pre-commitment rate, excluding space awaiting a pre-commitment
2.0
3.06m
0.86m
1.5
1.0
4.4% national vacancy if all uncommitted space became available now, with no absorption
1.09m
0.5
0.0
Total
Committed
Uncommitted spec. Awaiting pre-commit.
Source: Cushman & Wakefield Research
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
NEW SUPPLY RESPONSE UNLIKELY BEFORE 2029 Development economics remain challenging, pointing to constrained new supply and renewed rental pressure as existing availability is absorbed.
Economic rents sit above market rents Current market vs economic net face rent ($/sqm)
Feasibility gap persists until 2029 Economic rent vs market net effective rent, national average ($/sqm)
Development feasibility has deteriorated further in 2026 as construction and funding costs have risen. Projects commencing in 2025 benefited from expectations of further yield compression; however, rising rates and the prospect of further increases have put pressure on the current pipeline. At current land values, economic rents remain 10 to 25% above prevailing market rents across several key markets. Developers are therefore reassessing projects, while increasingly pushing project commencements further out. We previously expected development feasibility to begin improving in early 2027. The changed yield and rate outlook has pushed the expected recovery in development feasibility closer to 2029. With new supply likely to remain constrained in the interim, rental growth will increasingly depend on how quickly existing vacancy is absorbed. Some projects may still proceed sooner. Sites acquired before 2021 can be more viable because of their lower input land cost. Rising holding costs, particularly capitalised interest, may also prompt some developers to accept lower margins and commence construction.
$200
Sydney Outer West
$180
Sydney Central West
Melbourne West
$160
Melbourne North
$140
Melbourne South East
Brisbane South
$120
Brisbane TC
$100
Brisbane West
Perth South
$80
Adelaide Inner North
$60
2015
2018
2021
2024 2027F 2030F
$0 $50 $100 $150 $200 $250 $300 $350
Economic rent
Current market rent
Economic rent
Market net effective
Dashed = forecast
Source: Cushman & Wakefield Research
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
WHERE WILL CONDITIONS TIGHTEN FIRST? Vacancy is forecast to fall across all five markets as absorption recovers, although tightening will vary by city and precinct.
Vacancy to trend lower from 2027 National L&I vacancy rate by city
Improving net absorption and a smaller uncommitted supply pipeline are expected to reduce vacancy across the major markets from 2027. Brisbane’s tightening, already underway in 2026, is forecast to continue, while Melbourne begins to recover from a higher vacancy rate. Citywide vacancy will not capture the full extent of the change in occupier choice. Infill and land- constrained locations are forecast to tighten earlier once current speculative supply is digested. Alternatively, vacancy in greenfield precincts, including Sydney’s Outer West and Melbourne’s South East, are expected to remain higher for longer, although some large facilities will fall out of the numbers in early 2027, adding to downward vacancy pressure. Leasing availability is forecast to reach its lowest point in 2029 before rising in several markets in early 2030, supported by improving development economics. The timing will depend on the strength of occupier demand and how much conditional development proceeds.
14%
12%
10%
8%
6%
4%
2%
0%
2016 2017 2018 2019 2020 2021
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Dashed = forecast
Sydney
Melbourne
Brisbane
Perth
Adelaide
Infill and land-constrained locations are forecast to tighten earlier once current speculative supply is digested.
Greenfield precincts, including Sydney's Outer West and Melbourne's South East, are expected to remain higher for longer.
Source: Cushman & Wakefield Research
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AUSTRALIA'S OCCUPIER MARKET OUTLOOK
RENTAL GROWTH LIKELY TO BECOME MORE BROAD-BASED A narrowing supply pipeline is expected to lift rents, with incentive trends diverging between infill and greenfield markets.
Net effective growth to outpace face rents Prime rental growth by city, 5-year CAGR (2027 to 2031)
Incentives expected to ease from late 2027 National stock-weighted prime incentives*
National prime net face rents are forecast to rise by approximately 4.0% in 2027, representing a pick-up in growth from the levels recorded over the past 12 months. Rental growth is expected to become more broad-based, but the timing will increasingly depend on local availability rather than a uniform tightening in national vacancy. The supply outlook is central to this forecast. Rental growth is expected to be strongest where improving demand meets limited choice of suitable prime space. In contrast, submarkets with a larger pool of speculative availability, including Sydney Outer West and Melbourne South East, are likely to see slower growth and more persistent incentives. In greenfield and pre-lease driven markets, incentives are forecast to remain sticky through 2027 as occupiers absorb recently completed and planned supply. They are expected to decline from 2028 as the pool of available space reduces. The difference in timing means effective rental growth could diverge considerably between submarkets, even where face rent growth is similar. Infill and land-constrained locations are likely to see incentives fall more sharply through 2027, supporting an outperformance of net effective rental growth.
24%
6%
5.4%
5.2%
5.1%
22%
5%
20%
4.0%
4.0%
3.9%
3.9%
4%
3.8%
3.8%
3.6%
18%
16%
3%
14%
2%
12%
1%
10%
8%
0%
2016
2019
2022
2025
2028
2031
Sydney Melbourne Brisbane Adelaide
Perth
Net face
Net effective
Actual
Forecast
*Includes greenfield markets: Sydney Outer West, Melbourne West and South East, Brisbane South, Perth South and Adelaide Outer North. Source: Cushman & Wakefield Research
30
CUSHMAN & WAKEFIELD |
04 WHAT HAPPENS NEXT
AUSTRALIA'S OCCUPIER MARKET OUTLOOK
ALIGNING REAL ESTATE WITH OPERATING STRATEGY As occupiers review their networks, our Supply Chain & Logistics Advisory team links supply chain strategy to real estate decisions.
This report shows occupiers shifting from expansion to optimisation. Renewals, relocations and consolidation are increasingly tested against the whole operating cost, not rent alone. Yet supply chain strategy and real estate decisions are often disconnected. Lease events are managed site by site, relocations are triggered reactively and duplication from past acquisitions stays embedded in the footprint. The result is rising occupancy cost, sub-optimal locations and missed consolidation opportunities. Cushman & Wakefield's Supply Chain & Logistics Advisory (SCLA) team bridges operating strategy and real estate execution, so occupiers decide what their network should look like before deciding where to lease.
WHAT WE DO
RESULTS FROM OUR WORK
Optimise industrial footprints to cut cost and support growth
Location optimisation The right number of sites, in the right location and rightsized
01 Network & Operating Strategy
02 Facility Design & Recommendation
03 Lease Event & Portfolio Alignment
04 Implementation Roadmap
Service enhancement Uplift in key metrics such as next- day delivery performance
ADVISORY SUPPORT WHEN IT MATTERS MOST
Industrial Portfolio Health Check Rapid 4 to 6 week diagnosis • Lease exposure mapping
Lease Event & Portfolio Alignment Ahead of clustered expiries • Renewal vs relocation modelling • Sub-optimal site identification • Sequenced action plan
Operating cost reduction Reduction in key operating costs, particularly labour and transport
• Cost-to-serve overlay • Quick-win identification
Working capital reduction Reduced inventory holding, freeing capital for deployment
M&A Integration & Rationalisation Following acquisitions • Duplication and site overlap mapping • Consolidation modelling • Transition strategy
Manufacturing & Distribution Footprint Reset 18 to 26 week strategic programme • Holistic network review • Consolidation and relocation scenarios • Lease alignment and execution roadmap
Drawn from selected Cushman & Wakefield SCLA client engagements.
WHEN TO REVIEW THE NETWORK
Lease expiries cluster Test renewal against relocation before committing.
Consolidation is on the table Model fewer, higher-capacity sites against cost and service.
Automation or capex decisions Match site and building specification to the operation.
Acquisitions add duplication Map overlap and sequence rationalisation.
Margin pressure intensifies Overlay cost-to-serve on leases to find quick wins.
01
02
03
04
05
Contact: Michael Carson, Head of Supply Chain & Logistics Advisory, APAC & EMEA | michael.carson@cushwake.com Results are drawn from selected Cushman & Wakefield SCLA client engagements.
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