New analysis from Cushman & Wakefield out today indicates Australia 's industrial property market will remain undersupplied with vacancies remaining below the 5.0% market equilibrium and a likely overstated supply pipeline.

The Is Oversupply an Overstatement?  report reveals:

• Following years of robust demand for facilities above 20,000 sqm, demand has shifted in 2024, with smaller leases being the most active by a substantial margin.
• In H1 2024, 77% of lease deals nationally (by number) were in the 3,000 – 10,000 sqm size bracket, while the average deal size has fallen 45% from the level recorded in 2022.
• The supply pipeline doesn’t match this, largely because plans were submitted and approved prior to 2024 when demand was still robust for big box facilities.
• In 2024 and 2025, 40% of supply additions at this stage will stem from facilities above 20,000 sqm, while just 22% is for facilities between 3,000 – 10,000 sqm.
• The report also found uncertainty in the delivery and timing of the 2025 supply chain as a result of elevated construction costs and capital constraints.
• At this stage, just 15% of the 2025 pipeline has commenced construction, compared to 30% at the same point in 2023 for the 2024 pipeline. Just 23% of the 2025 supply pipeline is committed, while much of the balance won’t advance until pre-commitments are locked in.

Author Luke Crawford, Head of Logistics & Industrial Research, Australia, Cushman & Wakefield, said, “Strong market fundamentals have underpinned a large rise in warehouse supply within the Australian market in recent years but the landscape going forward is more complex.”

“Occupier demand has somewhat normalised in 2024, which is likely to have implications for the overall supply pipeline as the case for speculative strategies in select markets is reassessed.”“At the same time, higher construction costs and planning and servicing delays in several key precincts add further complexity and costs to developers, which will test the feasibility of projects.”“Even if all supply in the pipeline is delivered on time, Australia is forecast to remain an undersupplied market.”

Cushman & Wakefield’s report analyses supply pipelines across Australia and recommends strategies for both developers and occupiers to mitigate risk in this current environment. While demand has been patchy in 2024, take-up is expected to increase over the next 18 months, driven by improving economic conditions, positive real income growth, and contract renewals for transport & logistics groups, which will trigger deal activity.