Melbourne industrial vacancy stabilises for the first time since Q2 2024

The vacancy rate was stable at 4.6% in Q3.

New industrial supply in Melbourne’s industrial sector in Q3 2025 totalled 177,800 sqm, the lowest quarterly supply seen since Q2 2024 and 3% below the ten-year quarterly average, according to a JLL report. Q3 2025 had the highest proportion of completions absorbed year to date, with 55% of stock absorbed upon completion.

“Melbourne’s vacancy was stable in Q3 2025 at 4.6%. It was the first quarter since Q2 2024 that vacancy did not increase. Melbourne’s South East precinct maintains the lowest vacancy of any east coast market at 2.1%,” the report said.

Here’s more from JLL:

Gross take-up increased quarter-on-quarter for the first time in 2025, with the highest quarterly take-up year to date of 283,100 sqm. The west accounted for 56%, followed by the South East (27%), North (10%) and City Fringe (7%).

Demand was led by the retail trade sector, accounting for 24% of gross take-up (68,400 sqm), the highest level seen by the sector year to date. Notable demand was also recorded in manufacturing and the transport, postal and warehouse sector.

Local private capital led investment volumes, with increased activity in secondary and smaller asset transactions

Prime net face rent growth was either stable or increased across all Melbourne precincts in Q3 2025, albeit incentives also increased, hindering effective rent growth. Secondary net face rents and incentives growth was mixed across precincts.

Investment volumes were subdued in Q3 2025 compared to Q2 2025, totalling AUD 248 million across 28 transactions. Local private capital led investment volumes with increased activity in secondary and smaller asset transactions.

Outlook: Rent growth is forecast to stabilise over the near-term as incentive levels near their cyclical high

Supply levels are expected to ease, with increasing levels of stock currently under construction contributing to gross take-up prior to completion due to high incentives being offered and a decrease in speculative development commencements.

Sovereign uncertainty will continue to hinder investment confidence and yield compression in the near-term.