Australia’s industrial and logistics sector is on solid ground after another year of heavy investment, tight vacancy, and new supply.
New figures from Colliers’ Industrial & Logistics Investment Review show national transaction volumes rose for a second consecutive year, up from $6.9 billion in 2024 to $8.3 billion in 2025.
Vacancy remains among the lowest globally, supported by sustained occupier demand and ongoing rental growth.
And while leasing activity moderated under economic headwinds, core market fundamentals held.
Gavin Bishop, Colliers Managing Director of Industrial & Logistics, said investor sentiment had shifted as the market moved into a new phase of the cycle.
“The sector is now in a compression phase, with yields tightening and confidence returning to total returns,” he said.
Capital Flows Return to the Sector
Investor activity strengthened throughout 2025, driven by stabilising debt conditions and the search for secure income streams.
Mr Burston said core and core-plus strategies accounted for 65 per cent of transaction volumes, reflecting a preference for assets with long leases and established tenants.
Domestic buyers accounted for more than 87 per cent of transactions, while offshore capital increasingly invested through local fund managers.
Jordan Pangallo, Colliers Senior Manager of Research, said investors were allocating more capital to industrial property because long-term fundamentals remain compelling.
“Investors are committing greater amounts of capital to the industrial sector because the market fundamentals at play remain strong,” he said.
“A major driver of this confidence is the ongoing shift toward online retail and broader e-commerce.”
Queensland Surges as Investment Map Shifts
Queensland recorded its strongest year on record for industrial investment in 2025, overtaking Victoria to become Australia’s second-largest market.
Brisbane, in particular, was attracting capital on the back of Olympic-led infrastructure spend, stronger population growth and increased tenant activity.
“Together these factors are generating a set of compelling fundamentals that are drawing sustained investor interest into the Queensland market,” he said.
While New South Wales retained the largest share of national activity, outer-ring industrial precincts overtook infill locations for the first time, accounting for 54 per cent of national transactions.
Mr Pangallo said investors are turning to these precincts as scale becomes harder to achieve in established inner markets.
“Many of these regions are now experiencing supply shortages of their own, which further supports ongoing demand,” he said.
Record Supply, Limited Oversupply
The next test for the sector is expected later this year, when the largest volume of new industrial space on record is delivered.
Colliers anticipates vacancy to remain near cyclical peaks as speculative developments are absorbed, before trending down over the following 12 to 18 months.
By 2028, vacancy is forecast to fall below 3 per cent, led by Perth and Adelaide.
Mr Pangallo said recent years had demonstrated the sector’s capacity to absorb elevated supply without materially increasing vacancy.
“Australia has now experienced six consecutive years of supply volumes that have exceeded long-term averages, yet vacancy remains exceptionally tight,” he said.
Take-up has consistently outpaced supply, with development increasingly pre-commitment-led, an agile pipeline and natural constraints on land and planning preventing oversupply.
“This combination of structural demand, disciplined supply and a rising share of outdated facilities ensures that the market can manage strong delivery volumes without experiencing a meaningful increase in vacancy,” he said.
Structural Demand Underpins Medium-Term Outlook
Mr Pangallo expects the underlying demand for industrial space to be supported by population growth, infrastructure investment and expanding freight networks.
Specialised asset classes were set to play a larger role in national take-up.
“Cold storage facilities and data centres are also expected to contribute significantly to overall industrial demand,” he said.
“Both are expected to take a larger share of national take-up, and they will continue to increase their influence on development activity and site selection across the industrial market.”
From 2027 onwards, the supply pipeline is expected to be moderate, influencing vacancy and rental growth.
“There is a clear relationship between supply conditions, available space and pricing outcomes,” he said.
