Australia’s industrial and logistics sector is settling into a healthier, more predictable rhythm in mid-2026 after a few years of rental spikes and very low vacancy rates. Across the country, the underlying fundamentals are still solid, underpinned by steady demand for e-commerce, third-party logistics and data centres, even as businesses and occupiers navigate broader economic challenges.
Leasing momentum across Australia’s capital cities remained healthy during the first half of 2026, with tenants recording a gross take-up of approximately 1.8 million square metres. To put that in perspective, in just six months, Australia wiped out more than half of the total leasing volume recorded for all of 2025.
Noticeably, tenants have continued to prefer top-tier, modern facilities, with roughly 80 per cent of deals happening in existing modern stock as users want ready-to-use spaces. Older secondary assets are taking longer to fill as tenants get more selective.
Many businesses and tenants have also chosen to simply renew their current leases, suggesting that they are deferring big moves until the broader economy clears up over the next year or two.
Melbourne has maintained its position as the most active leasing market nationwide, with huge absorption around its outer suburbs. Brisbane and Perth are also showing strong momentum, while Sydney tenants are playing things a bit more cautiously.
National vacancy has stabilised at between three and 4.5 per cent, suggesting availability is hitting its high mark for this cycle. Over 1.25 million square metres of new space was reportedly completed in the first half of 2026. While Sydney led completions during the first half of the year, the focus will shift heavily toward Melbourne in the second half.
Over half of the remaining space being built for 2026 is already pre-leased, offering near-term protection from oversupply. Looking further out, only 25 per cent of the proposed 2027 pipeline is actively under construction. Between high construction costs, slow planning approvals and banks refusing to lend without pre-commitments, many upcoming projects will be delayed. That built-in brake will keep the market from drowning in excess space in 2027 and 2028.
The limited availability of serviced industrial land is driving both demand nationally and value rates per square metre upwards quite markedly for englobo industrial sites. Western Australia and Queensland are significantly impacted.
Brisbane’s industrial land market is experiencing an unprecedented supply squeeze, driving developable and serviced land values to record highs across core precincts like the Australia TradeCoast, northern and south-western corridors. Years of elevated space absorption, fuelled by rapid population growth, e-commerce adoption and corporate demand for modern logistics infrastructure, have rapidly depleted development-ready sites, leaving greater Brisbane with fewer than five years of remaining industrial land capacity.
Physical and planning constraints, long infrastructure delivery lead times and escalating construction costs further impact new supply. As a result, intense competition between owner-occupiers, logistics operators and institutional investors has pushed prime rents up by roughly 50 to 80 per cent over the past five years and kept land values increasing at record levels. This structural deficit is set to compound as major civil works and staging demand for the Brisbane 2032 Olympics collide with an already severely restricted industrial land pipeline.
Headline net face rents are holding firm because landlords aren’t panicking across Australia. Super-prime industrial space in Sydney is still commanding around $270 per square metre, while Melbourne, Brisbane and Perth are floating in the $150 to $180 per square metre range. However, landlords are offering slightly better incentives (especially in Sydney and Melbourne), meaning effective rental growth has cooled down just a bit.
Capital markets had a massive start to the year. Total transaction dollars in Quarters 1 and 2 of 2026 have already topped the entire year of 2025.
National super-prime yields are sitting pretty steady at around a 6% midpoint. Yields in Sydney and Perth held flat, while Melbourne, Brisbane and Adelaide saw minor expansions. Victoria dominated investor focus, helped along by major flagship deals like the Moorabbin Airport sale.
The Australian industrial market is consolidating into a steady environment. While higher interest rates will keep yields from compressing anytime soon, tight long-term supply and reliable rental streams give this sector a rock-solid floor. Prime industrial real estate remains one of the safest, most dependable places to park capital in the country.