Australia’s industrial and logistics sector continues to demonstrate its resilience, with the latest CBRE Australia Industrial & Logistics report highlighting a market that is stabilising after several years of rapid expansion.
While elevated development activity has introduced more supply across several capital cities, strong occupier demand and continued investor confidence are supporting market fundamentals, particularly for modern, well-located assets.
CBRE's latest research shows the national industrial vacancy rate remained steady at 3.2% during the first half of 2026, remaining below the long-term equilibrium level of 4% and indicating that Australia's industrial market continues to be fundamentally undersupplied despite an increase in available stock.
Demand Continues to Outpace Expectations
One of the strongest themes emerging from the report is the resilience of occupier demand.
National net absorption accelerated significantly throughout the first half of the year, with businesses continuing to secure warehouse and logistics accommodation despite ongoing economic uncertainty. Gross leasing activity reached 1.8 million square metres during the first half of 2026, placing the market on track for another strong year of leasing performance.
Rather than signalling weakening fundamentals, the increase in vacancy experienced over the past 18 months largely reflects the delivery of projects commenced during the peak of the development cycle.
CBRE notes that vacancy is increasingly concentrated in older prime and secondary-grade assets, while newly completed super-prime facilities continue to lease well and outperform the broader market.
Development Pipeline Begins to Moderate
Although development activity remains elevated, the pipeline is beginning to normalise.
Developers continue to face higher construction costs, tighter financing conditions and increasing requirements for pre-commitment before commencing new projects. These factors are expected to moderate future supply and gradually rebalance market conditions.
Approximately 40% of the current 2026–2027 development pipeline is already pre-committed, reflecting continued confidence from major occupiers while reducing speculative delivery risk.
Investment Appetite Remains Strong
Investor demand for industrial assets also remains robust.
National super-prime yields have remained broadly stable, while industrial investment activity has already surpassed total transaction volumes recorded during calendar year 2025, highlighting the continued depth of capital targeting Australia's logistics sector.
As investors increasingly focus on long-term income security and supply-constrained markets, modern industrial assets with strong transport connectivity continue to attract the greatest competition.
A Positive Outlook for the Sector
Looking ahead, CBRE expects vacancy to peak during the second half of 2026 before gradually trending lower as new supply moderates and leasing demand continues to strengthen. Effective rental growth is also expected to improve as incentive levels stabilise and occupier competition increases.
For developers, investors and occupiers alike, Australia's industrial market continues to present compelling long-term fundamentals.
While the market has shifted from the extraordinary conditions experienced during the pandemic-era logistics boom, the underlying drivers of demand—including population growth, e-commerce, supply chain investment and infrastructure spending—remain firmly in place.
As a result, well-positioned industrial assets and development opportunities continue to be among the most sought-after property investments across the country.
