Skyline of Sydney
The supply response has been insufficient to meet demands in the Sydney market. Image: Canva
  • Town planning challenges is a major factor for the land-constrained market
  • Only 4% of total industrial zoned land in the metro area is undeveloped and serviced
  • Increased population expected to create demand for 3.6M sqm of logistics floor space

Sydney’s land pressure challenges continue to plague the city’s industrial property sector, according to a CBRE Sydney Industrial and Logistics Land Supply report.

The city’s industrial and logistics vacancy rate is not expected to move much over the next year as town planning challenges continue to be a thorn in one of Australia’s most land-constrained markets.

According to the report, the new development supply expected to be delivered in 2023 and 2024 has a high pre-commitment level, at 63% and 48% respectively.

The report highlights a chronic stock shortage, with supply falling considerably short of demand from transport and logistics, e-commerce and manufacturing occupiers.

CBRE Australia and New Zealand Regional Director Cameron Grier says, “The available pipeline of industrial and logistics land on the Eastern Seaboard remains very tight by historic levels.”

Grier added that Sydney faces a unique dilemma, with vast swathes of zoned land but planning authority challenges, meaning most of that land won’t be unlocked until well into the future.

“This could potentially see some larger occupiers being forced to consider Melbourne or Brisbane until developers can provide certainty of delivery on many sites,” he said.

“The Aerotropolis will eventually relieve most of Sydney’s future land pressure challenges, however, if the lessons of Kemps Creek around planning and timeframes are not learned, Sydney is going to lose business to the other states,” according to Grier.

The report also highlights that Sydney has the tightest industrial and logistics vacancy rate of any city globally at 0.2% and this is predicted to remain at sub-2% over the next two years.

CBRE’s Head of Industrial and Logistics Research Sass J-Baleh says the lack of land supply is driving significant appreciation in land values, with 25% year-on-year growth recorded for 1.6 hectare lots over the past three years.

“In comparison to some other major offshore markets, Australia’s share of floorspace under construction to total space is one of the lowest globally,” she said.

“Given the increase in Australia’s migration program planning, we estimate an additional 800,000 people will be living in Sydney between now and 2031.

“The forecast population growth is expected to create demand for around 3.6 million sqm of industrial and logistics floor space over this period.”



You May Also Like

Perth apartment popularity on the rise, but new stock is still looking for firmer financial foudations

Costs remain a major hurdle to making more affordable apartments viable to build.

Carly Barrett and Paul Rossen awarded the AIA WA President’s Prize

This year’s award recipients have contributed towards growing public interest and understanding of architecture, as well as mentoring the next generation of architects.

2024 Australian Interior Design Awards reveals a record 222 shortlisted projects

Sustainability, collaboration, and timeless natural materials were this year’s biggest trends.

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award categories

This year’s awards include several brand new categories, with entries closing 2 August 2024.