Sydney new warehouse space to hit 1.4m sqm over the next 12 months

The under-construction stock has a healthy level of precommitment at 58%.

Sydney’s industrial and logistics market is poised for a renewed supply cycle in 2026, with 1,385,700 sqm of new warehouse space forecast for completion over the next 12 months, according to JLL. The upcoming pipeline is underpinned by a relatively healthy 58% pre-commitment rate across stock currently under construction, positioning the market for improved balance as demand stabilises.

JLL’s review of 2025 showed that leasing momentum softened amid ongoing economic uncertainty, even as consumer demand in New South Wales began to recover. The NSW monthly household spending index rose 5.4% year-on-year in October 2025, although spending on services continued to outpace goods consumption, tempering industrial space requirements.

Annual supply in 2025 totalled 595,800 sqm, representing a 45.1% decline from 2024 as development activity slowed. In the final quarter of the year, 113,300 sqm was delivered, all within the outer western precincts, with the Outer Central West accounting for the largest share of completions. According to JLL, a combination of occupier consolidation, rising sub-lease availability and speculative additions contributed to vacancy edging higher across most precincts, lifting headline vacancy by 0.8 percentage points to 5.8% by year-end.

Leasing volumes also moderated in the fourth quarter, with gross take-up declining to 136,100 sqm. Activity was concentrated in existing warehouse stock, while pre-lease deals accounted for 30.9% of quarterly take-up. Prime net face rents remained broadly stable across precincts, reflecting the lower volume of executed transactions.

On the investment front, transaction volumes slowed sharply in the final quarter of 2025 as large-scale acquisitions paused, with total deals reaching AUD 659.8 million compared to AUD 2.1 billion in the previous quarter. Despite the softer activity, JLL noted that yields continued to tighten, signalling underlying investor confidence.

Looking ahead, JLL expects moderate rental growth of between 2.5% and 3.0% over the next 12 months. Combined with the continuation of yield compression, this is forecast to support improved capital values through 2026, even as the market absorbs a significant wave of new supply.