But limited availability of industrial space emerges as key concern
Australia’s commercial and industrial property sector remains broadly strong and stable, though performance varies by location and asset type, according to Herron Todd White’s (HTW) latest Month in Review report.
However, HTW cautioned that the availability of industrial land across the major regions is set to become a critical issue over the short to medium term as supply remains limited.
In Melbourne, the industrial market is expected to stabilise in 2026 after softer conditions in 2024 and 2025, when higher interest rates, yield expansion and increased supply weighed on values. Prime rents are forecast to rise by around 3% to 4%, with capital values gradually recovering as yield pressures ease. A clear “flight to quality” towards modern, well‑located assets is expected to continue.
Sydney’s industrial market has entered a consolidation phase. Property values showed little growth in 2025 and rents have levelled after earlier strong gains. Transaction volumes picked up late in 2025 despite flat pricing, suggesting cautious confidence. A chronic shortage of industrial land and limited new stock remain the main supports for values and rents, and a key structural factor for lenders assessing long‑term risk.
Across south‑east Queensland, industrial land values have continued to climb on the back of restricted supply. In contrast, tenant demand in the large‑format leasing market eased in 2025, leaving net face rents broadly stable but pushing incentives higher and net effective rents lower, particularly in the south‑western corridor with its recent wave of new stock.
Northern precincts such as Narangba recorded stronger leasing, with some pre‑commitments above $200 per square metre net and incentives around 15%. The Sunshine Coast also achieved healthy rents for new buildings, while Brisbane’s TradeCoast precinct remained the city’s premier industrial location, supported by limited vacancy. Prime yields are expected to sit around 5.00% to 6.00%, with some softening likely for secondary assets.
The land segment has outperformed all others, according to the HTW February 2026 Month in Review. On the Gold Coast, Coomera has reached up to $1,600 per square metre, while Burleigh is approaching $2,000 per square metre. These land rates are placing upward pressure on development costs and influencing project viability and funding structures.
.Regional divergence
In South Australia, industrial has been the best‑performing sector over the past year. Scarcity of zoned land in established metropolitan areas has pushed demand into Adelaide’s outer north, where the Northern Expressway has improved access and driven sharp land value gains. A storage yard at 18‑20 Deuter Road, Burton, for example, rose in price from $1.5 million in June 2023 to $2.3 million in September 2025 in comparable condition, a 53% increase in just over a year. Around 50 hectares at Waterloo Corner is progressing through rezoning for industrial use, further entrenching the outer north as a logistics hub.
In Perth, land values in historically secondary industrial locations have exceeded $600 per square metre, driven by an undersupply of development‑ready land and limited scope for new supply in the near term. Face net rents for modern, high‑specification space held at about $150 per square metre per annum in 2024 before rising again in 2025, with some deals close to $200 per square metre per annum – unprecedented levels for the local market. Owner‑occupiers are leading much of the activity, mirroring trends in eastern capitals.
Darwin presents the opposite land dynamic. Better‑quality, larger industrial spaces have seen modest rental growth after years of flat or declining values, but land prices remain subdued due to oversupply and limited demand. High construction costs are capping new development, while yields for good‑quality assets typically range from 6.50% to 7.50%, with secondary property trading up to two percentage points higher.
“Overall, the industrial market across the country continues to show signs of strength and stability, with variations depending on the specific location and type of asset,” said David Walsh (pictured top), commercial director at Herron Todd White.
“It is obvious from each major region that availability of industrial land will become a critical issue over the short to medium term with limited supply, while Darwin continues to face challenges in land value appreciation.”
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