Keeping the Lights On: Growing Pains Jeopardise Industrial Boom

Australia’s industrial and logistics sector is running hot—but sustaining the boom will mean overcoming its own growing pains. This was the message from The Urban Developer Industrial and Logistics Summit 2025 in Sydney last week, where leading developers, investors and occupiers explored how to unlock the next wave of growth through faster planning, smarter capital and cleaner energy. Demand for industrial space keeps climbing, driven by e-commerce, infrastructure investment and population growth. But the networks powering the sector’s expansion—from energy and planning to supply chains and skills—are struggling to keep pace. “Serviced land is the scarce commodity,” Charter Hall head of industrial and logistics development Andrew Simons says. “You can’t just bring a site to market anymore—you’ve got to bring power, you’ve to bring infrastructure.” ▲ JLL’s Annabel McFarlane during her presentation at The Urban Developer Industrial &amp; Logistics Summit 2025. JLL head of strategic research Australia Annabel McFarlane says demand has cooled from pandemic peaks but remains resilient. “Demand is flattish, it’s not going away,” she says. The real pressure, she warns, comes from uneven supply as some precincts stall on power and infrastructure. McFarlane says national vacancy remains near record lows about 1.2 per cent, pushing rents up 6 to 8 per cent a year. “It’s still one of the tightest markets globally,” she says. Market momentum and shifting capital Even so, capital and construction are adjusting to new realities. “Industrial transaction volumes are the highest of the core sectors,” she says. “Liquidity is coming back in a strong way.” ▲ Source: The Urban Developer Sydney and Brisbane lead the recovery, while Melbourne lags as policy settings and surcharges weigh on sentiment. “If you exclude one portfolio deal, we haven’t had a single offshore capital investment into Victoria in 2025,” McFarlane says. “It looks like all that capital has gone towards Queensland.” Vacancy data tells the same story. “Sydney’s vacancy is coming down again, Melbourne is stable and Queensland is rising slightly due to new speculative stock,” she says. Despite softer sentiment, industrial remains Australia’s most competitive asset class—absorbing space faster than it can be delivered. Infrastructure at its limits The summit put numbers to the squeeze. Simons says Brisbane has been absorbing about 200ha of industrial land each year for the past five years, leaving only five years of supply at current take-up rates. ▲ Charter Hall’s Andrew Simons speaking on the Unlocking Land at Scale panel with Hale Capital Partners ’ Kenji Fukuda, Salta Properties’ Owen Smith and The Urban Developer ’s Adam Di Marco. Sydney faces the same strain. “There’s only 330ha of undeveloped land actually serviced and ready to go, and we’re taking about 200ha a year,” Simons says. Even when land exists, infrastructure lags. “We’ve seen it out west where buildings are finished but there’s no road or power,” he says. In Melbourne, supply looks healthier on paper but delivery is slowing. Salta Properties director, commercial and industrial development Owen Smith says the bottleneck lies within the system, not the market. “You’re sitting there with buildings going up quickly and demand pushing but you can’t get a road or a drain or power connected,” he says. Smith points to red tape and staff churn within authorities as major drags on delivery. Developers can secure land and finance but essential services often lag months behind, delaying completion and inflating costs. Speculative development—where projects proceed without a tenant in place—once helped plug gaps by bringing stock to market quickly. McFarlane says this pipeline has now dried up. “Queensland has all but stopped [speculative development],” she says. “Sydney’s last major projects are finishing now and Melbourne remains subdued.” Simons says aligning infrastructure delivery with land release will be critical, while Smith calls for faster, better-resourced planning systems. McFarlane remains confident demand will hold once delivery catches up. Capital flows and first-mile focus Infrastructure may limit delivery but capital is reshaping how and where projects move forward. ▲ Avenue Bank’s Peita Piper speaking on the Occupiers, Capital and New Niches panel with MaxCap Group ’ s Adam Matkovich and Adam Di Marco. Avenue Bank chief executive Peita Piper says legacy lenders no longer move fast enough. “We’re the first and only bank in Australia to specialise in bank guarantees,” she says. “We promise guarantees within 24 hours—the fastest we’ve done is an hour and a half.” Private capital is also filling the gap. MaxCap Group state director Adam Matkovich says investors are pouring into industrial finance. “We have an insatiable appetite for industrial funding,” he says. “Our investors are very keen but competition for projects is intense.” Centennial Property Group joint managing director Paul Ford says disciplined capital and strategic location will define the next phase of growth. “The strongest opportunity now sits in metro and inner-ring logistics—smaller, closer, faster,” he says. Centennial has built its business on selectivity, reviewing hundreds of assets each year but moving only when pricing and infrastructure align. “We’re patient with capital—we’d rather hand money back than force a deal.” He says investor confidence is returning, led by Sydney and Brisbane, while Melbourne offers value for those prepared to hold for the long term. ▲ Centennial Property Group joint managing director Paul Ford ( left ) says disciplined capital and strategic location will define the next phase of growth. Tight land supply and rental growth continue to underpin the market, even as debt margins narrow and construction costs remain high. Global investors are staying the course but shifting focus. Realterm head of investment Australia Charlotte Brabant says freight-linked, “first-mile” assets are now the priority. “We invest in transport and infrastructure assets for the transport industry,” she says. “We target networks that are seaside, landside, railside and roadside.” Since establishing its Australian presence, Realterm has built an east-coast portfolio including a 41,000sq m container yard in south-west Sydney’s Chipping Norton. “More than 30ha of container-rated hardstand have disappeared from south-west Sydney in the past decade,” Brabant says. “Containers move within 40km of the port but there’s nowhere to put them.” ▲ Realterm’s Charlotte Brabant and Cabot Properties’ Chris Favretto discuss shifting global appetite, regulatory pressures and the rise of joint ventures. Cabot Properties head of investment Australia Chris Favretto says investors remain confident. “We’re still incredibly bullish on the Australian industrial market,” he says. “Transaction volumes are holding near long-term averages.” Both say the next investment frontier is resilience—assets powered, sustainable and ready for electrification. “It’s about availability of power, not just for today’s warehouse but for EV charging and future use,” Brabant says. Building smarter, cleaner and faster Developers are cutting carbon, costs and time through new design and delivery models. Stockland development logistics director Trevor Lee says innovation now centres on decarbonisation and digital integration. “We’re net zero on scope one and two and cutting scope three emissions through low-carbon materials,” he says. “Green steel, green concrete and biofuels all play a part.” Stockland is using low-carbon steel made in electric-arc furnaces powered by renewables, cutting emissions by 87 per cent on a like-for-like basis. “We know we pay more but we can’t reach our targets without it,” Lee says. “Scale helps, we can do national procurement deals and make sustainable materials viable.” ▲ Maddocks partner Lindsay Sheather outlines upcoming regulatory shifts during the summit. Astina Group co-founder and director William Schrumpf takes a more hands-on, design-led path. From Penrith in Western Sydney, Astina has expanded from multi-residential and hotels into micro-industrial with its Designer Space project—252 compact industrial units priced from about $200,000. “It’s storage but with style and service,” Schrumpf says. “Small businesses, trades and downsizers can own flexible space with shared amenity—a cafe, concierge and delivery service.” Astina built the project entirely in-house, casting 20,000sq m of precast panels on site to save time and money. “We cut a few million from costs and kept full control over quality,” Schrumpf says. “We’d do it again—industrial is efficient and enjoyable to build.” Both say collaboration drives innovation. “We share ideas across the sector—green steel, solar, batteries, concrete,” Lee says. “Everyone benefits when innovation spreads.” Regulation is reinforcing the shift, says Maddocks partner Lindsay Sheather. From 2026, large lease deals will require mandatory ACCC clearance, while new sustainability-reporting rules link building performance to tenants’ climate disclosures. “Scope 3 emissions include leased assets,” she says. “Efficiency and data sharing are becoming essential.” For Stockland, the next frontier is digital transformation. “AI now supports finance, legal and cost planning,” Lee says. He says Building Information Modelling (BIM)—a collaborative digital process used to design, cost and manage projects—still holds enormous untapped potential, but it requires full participation across design and construction teams. Schrumpf sees vertical growth ahead. “As land becomes scarcer, we’ll go up, not out,” he says. “Demand for storage and small-business space will only rise.”

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