The national logistics and industrial (L&I) market recorded its strongest take-up in nearly two years in Q2 2025, with almost one million sqm leased, according to the latest Cushman & Wakefield Marketbeat. This has been led by Sydney with approximately 425,000 sqm recorded for the quarter.
Despite ongoing geopolitical uncertainty tempering occupier sentiment, large-scale leasing transactions – including Kmart’s 100,000 sqm pre-commitment at Sydney’s Moorebank Intermodal Terminal – have driven high warehouse take-up.
While deals over 20,000 sqm made up 50% of total floorspace leased, most activity remains in the 3,000-10,000 sqm bracket, accounting for 71% of transactions. Speculative supply continues to be outweighed by demand, with the national vacancy rate edging up only slightly to 3% despite the delivery of 270,000 sqm in speculative supply.
The supply pipeline is shifting as developers respond to market conditions, with some projects delayed or paused due to rising feasibility constraints and a stronger focus on pre-leasing. Around 750,000 sqm of previously expected stock has been deferred beyond 2026, with 35% of the 2026 pipeline contingent on securing pre-commitments.
Momentum continues to build for capital markets, with a 70% increase in H1 2025 investment volumes year-on-year. Lower debt costs have driven yield compression within select markets, particularly in Sydney, which leads year-to- date deal volumes at $2.2 billion – already surpassing 2024’s total. Brisbane follows with $1 billion and Melbourne with just under $550 million in year-to-date investment volumes.
Cushman & Wakefield Head of Logistics & Industrial Research, Luke Crawford said, “While the sweet spot for demand is for sub 10,000 sqm facilities, we are seeing larger occupiers be more proactive as they become more comfortable with their inventory needs. Improved consumer spending and an ongoing flight-to-quality are expected to support greater leasing activity in the second half of the year, which will help absorb upcoming supply. For investors, further rate cuts are expected to spur greater liquidity and investment momentum. This will support further yield compression over the short to medium term.”
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