Home Property Australia Australia’s industrial vacancy rate remains lowest globally

Australia’s industrial vacancy rate remains lowest globally

  • July 17, 2024
  • by Property Australia
The average vacancy rate has lifted across most major markets but remains relatively low, at sub-two per cent.

The national average vacancy rate in Australia’s Industrial & Logistics market continues to be the lowest globally at 1.9 per cent, with Perth holding the lowest vacancy rate in the country at 1.2 per cent.

CBRE’s H1 2024 Australia’s Industrial and Logistics Vacancy report showed a lift in vacancy rates for most markets across Australia, particularly Sydney, Brisbane and Melbourne, however overall vacancy remains at sub-two per cent.

Sass Jalili, CBRE Head of Industrial & Logistics Research said, “We are witnessing a rise in the vacancy rate across most cities, as demand normalises, and greater sub-lease space is being added to the market. Despite the rise in space availability, we still do not expect to see the national average vacancy rate surpass four per cent in 2024.”

The report notes national net absorption has fallen to the lowest level on record with notable decreases across all Eastern Seaboard cities. Gross take-up of floorspace for 1H24 reached 0.9 million sqm as occupier demand begins to normalise, and only 50 per cent of take-up was the result of tenant expansion.

“Sub-lease activity has multiplied across the market but has not significantly affected the vacancy rate. Over the past six months sub-lease activity has been most prominent in the Sydney market, accounting for 50 per cent of vacant floorspace,” Ms Jalili added.

The report shows rental growth has slowed over the past 12 months and incentives began to rise in 1H24. The current year-on-year growth rate for national super prime grade face rents (supply-weighted average) is 12 per cent (as at 2Q24 preliminary data). Rent growth is expected to further reduce over 2024 and incentive levels will continue to rise across all markets.

CBRE Industrial & Logistics Regional Director Michael O’Neill said, “Over Q1 2024 transaction activity was slow, but that is not surprising given the incredible rental growth of previous years owing to low vacancy. High prevailing rents, softening consumer demand, higher outgoings, and reduced sense of urgency all contributed to a slower start for all markets. This has resulted in vacancy approaching or exceeding two per cent in nearly all markets. Overall, we’re seeing the market begin to normalise to pre pandemic conditions.”

In New South Wales, vacancy rates are zero in North and North Sydney, with Metro West and Central West both at 0.3 per cent. 

In Adelaide, North, East and South vacancies are at zero per cent.