Amid resilient land absorption volumes in recent years and a predicted uplift in demand, Cushman & Wakefield modelling shows there is just five years of Australian industrial land supply. 

The Q4 2024 Industrial Horizons research assessed the availability of industrial land in all  Australian capital cities and potential take-up. It grouped land into ‘active supply’ – development-ready within 2 years – and ‘inactive supply’, the larger share of parcels found  to be unserviced or unlikely to be ready in the current development cycle. 

The analysis identified 3,520 hectares of active land supply in Australia, 40% of the country’s  9,600 hectares of vacant industrial land. Despite easing from its peak in 2022, take-up of  industrial land averages at 700 hectares per annum, which means there are just 5.0 years of  land supply remaining at a national level. Further, the average pre-lease size has grown by  63% since pre-pandemic averages, with just one transaction potentially absorbing more than  10 hectares of land. 

While Melbourne and Sydney lead the national land supply in hectares, accounting for 33%  and 30%, respectively, these cities have the fastest take-up and are set to run out of land in  approximately four years. Adelaide has the smallest pipeline with just 2.5 years of active  supply remaining. 

Luke Crawford, Head of Logistics and Industrial Research, Australia at Cushman &  Wakefield, said record levels of speculative and pre-commitment supply since 2020 have  reduced industrial land stocks across all markets. 

“While signs of an industrial land shortage were evident in 2021 and 2022, economic uncertainty over the past two years has masked this issue. With demand expected to  increase and the economic growth outlook improving, the true extent of the undersupply is  becoming clear.” 

“While overall land stocks may appear abundant on paper, the reality is that a large portion of this land is either unserviced, held by inactive owners or located in periphery precincts. With a shortage of developable parcels, we’re likely to see more redevelopment of infill sites, which could include multi-storey developments. This is also in response to occupiers’  preference for sites that are close to end users, offer operational efficiencies and strong ESG  credentials.” 

“Population growth alone will underpin demand for up to 4,000 hectares over the next  decade, and the challenge will be the availability of suitable and serviced sites.” 

Across Melbourne, 1,077 of the 3,169 hectares of land is considered active supply, broadly  split between the North and West submarkets. Scale remains a challenge for institutional  developers in the South East submarket, with 60% of lots in the area being sized below four  hectares.

In Sydney, with approximately 2,850 hectares of vacant industrial zoned land largely  concentrated within the Western Sydney Employment Area and the Aerotropolis precincts, in  reality less than half of this land has the ability to be developed within the next two years.  Land absorption in Sydney has also been supported by increased data centre demand with  approximately 20% of industrial land transactions* since 2020 being to such operators. 

In Brisbane, while 942 hectares of active supply appears high compared to other cities, only  24% of vacant land opportunities remain in sought-after, infill locations. This includes the  recently listed large-scale infill site at 99 Harcourt Road in Darra, which is attracting  institutional interest. Managed by Cushman & Wakefield, the 17 hectare industrial estate lies  on Brisbane’s Western corridor and has the capacity to accommodate over 85,000 sqm of  GFA. 

In Perth and Adelaide, availability in core precincts is extremely tight, and competition for the  remaining sites is high. While supply relief is on the horizon in select markets, the timing for  much of this land remains uncertain given zoning, servicing and infrastructure challenges. 

Surge in land transactions 

Despite planning and delivery uncertainty in select markets, demand for industrial land has  surged in 2024, with just over $3.0 billion trading so far for the year, according to Cushman &  Wakefield data. This represents the strongest volume of land sales for the same point in a  year and compares to $1.6 billion at the same point in 2023.  

The strong result has been underpinned by institutional and super fund acquisitions,  including from UniSuper, ISPT, Frasers and ESR, while data centre demand for land has  also been strong. 

David Hall, National Director, Head of Brokerage Industrial & Logistics, ANZ at Cushman &  Wakefield said, “Since 2020, almost $1.8 billion of industrial land has traded to data centre  operators in Sydney alone. These transactions have effectively removed over 135 hectares  of industrial land from the Sydney market, and demand from these operators shows no signs of abating.” 

Related Readings 

Industrial property market to remain undersupplied: Cushman research | The Industrialist

Logistics and Industrial deal sizes surge as investment market recovers - Cushman & Wakefield | The Industrialist