Industrial property has become the standout performer in Australia’s commercial sector, as strong demand for logistics and warehouse space continues to outpace the struggling office market.

Vacancy rates in Sydney’s west and Melbourne’s outer suburbs are at record lows, driving rents higher and attracting both domestic and international capital. In contrast, CBD office towers are grappling with double-digit vacancy rates as hybrid work patterns reduce demand for traditional space.

Recent deals include major acquisitions of distribution hubs by global investment groups, underscoring confidence in the long-term e-commerce trend.

JLL’s head of industrial research, Michael Hart, said the asset class was outperforming expectations.
“Industrial rents are growing at double-digit rates annually in some precincts, something we haven’t seen in decades. Investors are shifting out of office and retail into logistics because the fundamentals are so strong,” he said.

Analysts say industrial property will remain a key focus for superannuation funds and institutional investors seeking resilience against economic uncertainty.