Australia’s east coast is grappling with a severe industrial land shortage, with prices soaring and development opportunities becoming increasingly scarce.
A new report from CBRE reveals the severity of the issue, showing only 4% of serviced, industrial-zoned land in Sydney remains undeveloped.
The report warns logistics, e-commerce, and manufacturing demand is set to outstrip supply, leading to a projected deficit by 2030.
Similar challenges are emerging in Melbourne and Brisbane.
We spoke to CBRE experts to explore what this means for the future of industrial property in the eastern states.
Western Sydney Running Out of Room
The CBRE Sydney Industrial and Logistics Land Supply report shows the city’s key industrial hub in the west has just 190ha of land available for development over the coming 12 months.
Sass Jalili, CBRE’s Head of Industrial and Logistics, Data Centre Research Australia, said official data fails to capture the full extent of the problem.
“The Employment Lands Development Monitor (ELDM) identifies 333ha as zoned undeveloped and serviced - however, our in-depth analysis only identifies 190ha,” Ms Jalili said.
“There is a significant mismatch between headline data versus ‘underlying’ data.”
Industrial land values in Sydney have surged 49% over the past four years, with super prime industrial assets recording 7% year-on-year growth in 2024.
Tight vacancy rates - currently at just 2.1%, among the lowest in the world - are expected to stay below 4% in the coming year, pushing rents higher still.
“The supply response has been insufficient to meet demands in the Sydney market, and this has led to strong rent growth since 2021,” Ms Jalili said.
“E-commerce growth will continue to drive industrial and logistics floorspace demand.”
The opening of Western Sydney Airport in 2026 is expected to act as a powerful magnet for industrial and logistics occupiers, driving fresh opportunities in the region.
“As demand increases, this will likely result in higher land absorption rates, particularly in key precincts surrounding the airport,” she said.
Melbourne Industrial Market Under Pressure
It’s a similar picture in Melbourne, where industrial land supply is lagging behind long-term averages, fuelled by transport, retail, and e-commerce demand.
“We are below our long-term average for industrial land supply,” said Tom Hayes, CBRE’s Senior Director, Industrial and Logistics, Melbourne.
“With slow government re-zoning programs, demand is outweighing supply and driving businesses to choose other state governments who proactively accommodate economic demand.”
Mr Hayes expects demand to spike further over the next 5–10 years, driven by shifting consumer behaviour, population growth, and technological advances.
“Warehousing demand outstrips future development on existing industrial land supply,” he said.
“Our AI and Cloud requirements continue to increase exponentially and can only be accommodated on industrial land via data centre development.”
Brisbane Faces Critical Land Shortages
Brisbane’s industrial land is also under severe strain.
CBRE’s Queensland Industrial and Logistics Director, Matthew Frazer-Ryan, said Greater Brisbane had just 5% - or 653ha - of undeveloped, serviced industrial land.
“We have seen significant increases in land values. Over the past 12 months, prices for lots over 1.6ha have risen by 39% on average,” Mr Frazer-Ryan said.
“Demand has been driven by the Transport, Postal, and Warehousing sector, which accounted for 52% of activity across Greater Brisbane in the past quarter.”
Looking ahead, industrial land in prime locations will remain highly sought after.
“Demand for well-located industrial land will continue, particularly with good connections to major arterial networks that can readily and cost-effectively access our border population growth,” he said.
