After a period of rapid growth, Australia’s logistics sector has weathered a two-year slowdown — but signs of recovery are emerging.
The COVID-era e-commerce boom triggered unprecedented demand for industrial space, but as consumer spending declined, so did leasing activity.
Now, momentum is shifting, according to Colliers’ National Director of Industrial & Logistics, Hugh Gilbert.
“Demand for logistics space has seen a notable shift over the past couple of years,” Mr Gilbert said.
“In the last 24 months, there has been a noticeable decline in demand, largely due to a slowdown in consumer spending. However, there are early indications that demand is beginning to rebound.”
Here, Mr Gilbert outlines the four forces he predicts will drive growth in the sector over the coming years.
1. Melbourne Poised to Lead Recovery
Melbourne is set to become a logistics frontrunner.
“This is due to substantial infrastructure investments coming to fruition, coupled with the city's competitive gross effective costs,” he said.
“These factors make Melbourne an attractive option for logistics operations.”
International interest will also gather pace, particularly from Asia.
“One significant trend is the growing interest from Asian e-commerce operators in the Australian market, particularly from China,” he said.
“As the Chinese economy experiences a slowdown, these operators are looking to expand their presence in Australia.”
2. Investors Hone in on Land-Rich Assets
Investors will increasingly target development-ready logistics sites, as rising rents and land scarcity drive demand for long-term value.
“Investors are showing a growing preference for land-rich assets over fully developed sites,” he said.
“This trend is driven by the rising rents for hardstand areas, which continue to climb.”
While cost pressures are mounting, hardstand rents remain well below replacement cost — and will continue to attract investment.
“Land rates are continuing to rise in most markets, further influencing investor preferences towards land-rich assets,” he said.
3. Technology to Transforms the Sector
Technology will rapidly reshape logistics real estate, and as innovation accelerates, occupiers and investors will prioritise facilities that enable automation, scale, and resilience.
“Technology is playing a pivotal role in transforming the logistics real estate sector,” he said.
“Automation and robotics are becoming increasingly advanced and affordable, leading to larger facilities supported by better materials handling equipment.”
He said artificial intelligence will change warehouse design.
“AI is revolutionising inventory management, enabling much more efficient use of cubic capacity,” he said.
“These technological advancements support better utilisation of space and resources, making logistics operations more streamlined and cost-effective.”
4. Suburban Growth Corridors Take Centre Stage
As land in core locations becomes increasingly constrained, suburban and fringe markets will emerge as vital hubs.
“Emerging markets like Melton and Pakenham are set to become active warehousing hubs,” Mr Gilbert said.
“We will also likely see last-mile and multilevel logistics operations activate the city's fringe.”
Technology will be crucial to unlocking these new zones.
Automation will allow operators to maximise constrained footprints, reduce costs, and boost delivery speed.
“Land will remain chronically undersupplied in key markets, driving automation to become more commonplace, further enhancing the efficiency and capabilities of industrial assets,” he said.
As the sector rebounds, logistics players will need to act decisively, focusing on future-proof assets, embracing technology, and positioning for growth across new geographic frontiers.
