2024 was a year of change in the Industrial & Logistics market, as witnessed by Colliers Western Sydney team of experts.  Whilst the full-year take-up of industrial & logistics space in Western Sydney increased slightly from 2023, supply increased quarter on quarter as the leasing market continued to normalise from the highs of 2022 & 2023. 

In 2024, the Colliers Western Sydney Industrial & Logistics Team achieved remarkable success, completing 91 transactions across the year.  These market-leading transactions, comprising a mix of sales and leases, highlight the team’s reputation as trusted advisors. This recognition stems from their extensive experience and the comprehensive market data they leverage to assist clients.

The team is well versed on current market conditions, closely monitoring changes and can advise on their potential impact on your business. They assist in identifying the necessary actions to navigate these conditions effectively in both the sales and leasing markets. 

“Despite normalised conditions across the leasing sector, overall net face rents held firm throughout 2024.  But as supply increased throughout the year, incentives increased which led to a reduction in net effective rents across the market.” Mentioned Matthew Flynn, National Director | Industrial & Logistics Sydney West.

As occupiers continued to adjust to the ‘rebased’ rental norms of Western Sydney, with higher overall occupation costs, the Industrial & Logistics team witnessed a flight to quality with many Tenants focused on modern, high clearance warehousing to maximise cubic capacity. Many occupiers also looked to consolidate throughout 2024 as they sought to gain efficiencies and save costs by merging operations into their current footprint in Sydney or in some cases, shifting or increasing operations interstate.

Corporate occupiers were also noticeably more active throughout 2024.  Conversely general activity and new leasing from the 3PL & logistics sector was down with many groups looking to rationalise operations and reduce their footprints from the highs of 2022 – 2023. This sector accounted for just over 30% of the total take-up in 2024, which was down on previous years. Increased net rents and outgoings has put pressure on many 3PL groups with most now reassessing their customer base with a focus on the more profitable contracts or customers that can absorb or pass on increased occupation costs to the end consumer. 

“We predict this will likely continue in the 3PL sector until such time as pallet rates across the market increase to meet the increases in occupation costs. This will likely result in increased costs to the end consumers at the cash register, with most occupiers likely to try and pass on these increased occupation costs.” Said Mr Flynn.

Another notable theme in 2024 and a constant talking point, was the amount of sublease space offered to the market. At one point in mid-2024 sublease space accounted for some 41% of all vacancy in Western Sydney. Whilst this was not necessarily a concern for the market, given this space was often shared or limited to shorter term leases, it did add to overall supply in the market and provided occupiers with increased choice often at rental levels below the trending average. 

Looking forward into 2025, Colliers Western Sydney teams data shows that the overall vacancy rate has increased slightly across the market to 3.5%, but notes this is still below the 10-year average vacancy rate for Western Sydney. Sublease space still contributes to part of the vacancy now accounting for some 29% of the overall vacancy.

Tenant demand in the first few weeks of 2025 has been stable but despite slightly increased supply, we are forecasting face rents to hold firm, but net effective rents to soften as some owners may be forced to compete for Occupiers.

The industrial & logistics sales market across 2024 in Western Sydney performed extremely well, with Colliers Western Sydney Industrial & Logistics team proudly transacting 45 properties, totalling over $320,000,000.

Buyer demand was extremely strong throughout 2024, with arguably the strongest interest and pricing from the owner-occupier segment of the market.  This was driven by rising leasing costs and a stable debt market which led to record pricing being achieved across all submarkets in all size ranges. Owner occupier demand and pricing was strongest when there was an opportunity to occupy a property on settlement.  Shorter term leasebacks, or properties sold with leases expiring within the next two years also attracted very strong interest from owner occupiers. 

Investors also participated strongly throughout 2024, with some investors pricing assets sharply based on the new ‘rebased’ rental levels and/or pricing for future rental uplift.  One smaller investment sale the Colliers team were involved with resulted in a net yield of 4.8% being paid for an industrial asset, which was sharper than expected and very encouraging. 

“In a softer leasing market, with longer letting up periods and increased incentives being offered to occupiers, we would encourage investors to consider the sale path to capitalise on current market conditions of limited supply and strong buyer demand.” Said Mr Flynn. 

With suggestions of a potential interest rate reduction in early to mid-2025, and whilst supply of buildings for sale remaining low, there’s never been a better time to sell industrial & logistics property in Western Sydney. The Colliers Western Sydney Industrial & logistics team are well equipped to assist you with your sales needs, being among the national team that secured in H1 & H2 2023 and H1 2024 number one by number of sold properties transacted, awarded by MSCI Real Assets. 

Looking further ahead into 2025, the Western Sydney Industrial & logistics market remains robust, with solid underlying fundamentals. A growing population, a huge Western Sydney workforce and investments in infrastructure across the region makes this an ideal home for any business.

The Western Sydney team provide a holistic overview of the market, assisting clients in understanding competition and how to position your property, whether for sale or lease to achieve the best possible result the market will support. 

“Reach out to the team today to start your industrial & logistics property discussion. We are ready with extensive market knowledge to help your business make informed property decisions.” Said Mr. Flynn.

Related Readings 

Australian Real Estate Investment Review and Outlook 2025 – Industrial & Logistics take aways – Colliers