Despite investment challenges in the form of stubbornly high interest rates, a macroeconomic outlook that remains far from clear, and a lack of assets brought to market, investor capital continues to flow into the Australian logistics and industrial market.  

In Q1 2024, a total of AUD 2.47 billion of logistics and industrial market transactions were recorded across Australia, reflecting the resilience of the sector and the favourable fundamentals that continue to underpin investor confidence.   

However, it was demand from developers seeking development land that boosted quarterly sales, with land transactions accounting 73.2% of the total (AUD 1.81 billion). This was driven largely by large-scale land acquisitions in Sydney and Melbourne from Unisuper, ISPT, ESR and Frasers. 

Geographically, transaction volumes were predominantly split between Australia’s two largest industrial markets, Sydney and Melbourne which accounted for 85.4% of the national total. 

National Industrial - Quarterly Transaction Volume by Type, Q1 2023 to Q1 2024

Melbourne Highlights

Quarterly transaction volumes in Melbourne reached AUD 811.4 million in Q1 2024 – 76.4% above the long-term 10-year quarterly average of AUD 460.0 million. This quarterly total was dominated by two major land acquisitions exceeding AUD 200.0 million each. 

The largest transaction in Q1 2024 was UniSuper’s acquisition of a 66-hectare site in Deer Park in Melbourne’s West precinct. The superannuation fund paid AUD 260.0 million to Orica to secure the land. Additionally, ESR and Frasers entered into a joint venture to secure a 64-hectare site in Cranbourne in Melbourne’s South East, paying AUD 230.0 million to Salta Properties.

Sydney Highlights

Quarterly industrial transaction volumes in Sydney have exceeded AUD 1.0 billion for consecutive quarters, reaching AUD 1.3 billion in Q1 2024. The feat of back-to-back one-billion-dollar transaction quarters has only occurred once previously, at the peak industrial investment period in 2021.

Once again, major land sales underpinned the quarterly transaction total. This includes the largest industrial land sale recorded ever in Australia - a joint venture between superannuation funds ISPT and UniSuper acquired Burra Park - a 280-hectare site within the Western Sydney Aerotropolis in Badgery’s Creek.

The funds paid AUD 862.4 million to Roberts Jones Funds Management for the land holding.

Other market highlights 

Investment in other markets was more selective in Q1 2024 with transaction volumes in Brisbane, Adelaide and Perth all at levels below the respective long-term, 10-year quarterly averages. 

JLL’s Head of Industrial & Logistics - (Australia) Peter Blade said, “The entire industrial sector has demonstrated exceptional resilience during uncertain economic periods, proving its stability and longevity in the face of numerous challenges.

"What we're witnessing is the growth of a sector that is buoyant and progressive despite the prevailing headwinds. The recent trend of substantial land transactions signifies a considerable shift towards long-term investment strategies, as developers place confidence in the continued demand and performance of the Australian logistics and industrial market.

"This undoubtedly ties to Australia's promising growth forecast and undeterred consumption patterns, making industrial land a compelling investment and a robust pillar for the future of the Australian economy.”

JLL’s Director of Strategic Research - (Australia) Rick Warner said, “Investor appetite for logistics and industrial assets remains high, supported by strong growth fundamentals.

"Australia’s population growth forecast is one of the strongest of all mature economies globally and one thing we humans are good at is consume things. So as our population grows, this will support the growth of our retailers and wholesalers, as well as the supply chain that support them.  

“Developers have recognised this and are looking to future-proof development pipelines through opportunistic large-scale land acquisitions. Given that land is a finite resource, and ‘development ready’ serviced land is even scarcer, we’re seeing the prices developers are willing to pay reflect this,” said Mr. Warner.