Australia’s Industrial and Logistics (I&L) sector is set to experience an uplift in demand for space over the coming years, creating a new wave of supply demand imbalance in the market that is set to provide further opportunities for rental growth.  

Colliers’ research shows that future essential demand, that is the segments of the economy that are integral to societal functioning and economic growth including manufacturing, trade, change in demographics and consumption, is likely to reach 3.3 million per annum over the period 2024 to 2030, necessitating the I&L market to expand by 20 per cent by 2030. 

Every $1 billion increase in online retail sales translates to additional demand for 300,000 to 350,000sqm of specialised third-party logistics or fulfilment industrial facilities, while every $1 billion increase in health expenditure generates demand for 5,500 to 6,000 sqm of temperature-controlled facilities.

To offset this, there are only 16 million sqm of future developments in planning or D&C opportunties to be expected over this time period, given the existing constraints on land availability. 

“Australia’s I&L sector has experienced a fundamental structural shift in demand, establishing a new baseline for gross take-up underpinned by surging online retail penetration, rising healthcare expenditure, expanded trade flows, and the integration of advanced technologies fuelled by robust population growth,” Gavin Bishop, Colliers Managing Director Industrial and Logistics said. 

“While vacancy rates have inched upwards, they remain among some of the lowest globally, reinforcing the sector’s resilience in Australia. With a demand requirement of 3.3 million sqm per annum, the persistent land supply constraints are poised to increasingly restrict take-up capacity, likely precipitating a revived supply-demand imbalance by 2029, which is expected to catalyse another rental growth cycle.”

Although the supply cycle and broader economic cycles are expected to persist in 2025, the anticipated recovery in economic growth, as well as a recovery in trade volumes, is likely to bolster essential I&L demand. This recovery is expected to offset the cyclical effects in 2025, leading to a stabilisation in demand by 2027 as the market enters a more balanced phase.

When viewed against the backdrop of projected demand, it becomes evident that supply constraints are likely to emerge by 2029, assuming sufficient new supply is available to support the projected take-up.

However, construction costs remain elevated and higher growth rates are once again starting to emerge..

“The anticipated supply constraints also highlight the importance of sustainable development practices and efficient space utilisation. As the market tightens, there may be increased focus on innovative building designs that maximise usable space whilst minimising environmental impact, aligning with the broader trend towards sustainability in the I&L sector,” Colliers National Director, Industrial Advisory Peter Evans said. 

“The essential core of I&L demand from critical economic segments is fundamental to the future growth of Australia’s I&L market. Sustained market expansion and asset evolution are crucial for business and economic growth,” Colliers Manager of Research, Chen Lu added.

“Significant infrastructure and urban planning support will be required to keep pace with these developments. Without such advancements, the shortage of I&L space could pose a vulnerability to the national supply chain, creating bottlenecks that hinder population growth and economic expansion.”

More Colliers readings 

Thriving in South West Sydney: Sustained Market Success – Colliers |

Navigating the Gold Coast industrial market – Colliers 

Navigating Brisbane’s Industrial & Logistics Market: Strategic Insights – Colliers 

Strong fundamentals to drive Adelaide industrial market – Colliers 

The Surge in Subleases and Lease Re-Assignments in Melbourne’s East – Colliers 

The Industrial & Logistics team behind significant Perth transactions – Colliers

Emerging Developments Transforming Sydney’s Upper North Shore Industrial & Logistics Market – Colliers