Australian Logistics Expected to Boom as Global Players Aim $27B in Capital at the Sector Sponsored Feature

Global investors are sitting on a warchest of A$38 billion ($27 billion) in capital targeting Australian logistics, according to new research by Cushman & Wakefield, as the country continues to rise in prominence as a deployment target for global players and changing market dynamics make the sector appealing across a broad spectrum of strategies. 

“The A$38 billion in capital targeting Australian logistics reflects both pent-up demand following a lull in deals from 2022 through 2024, as well as fresh allocations and new entrants,” according to Tony Iuliano, head of logistics and industrial for Australia and New Zealand at Cushman & Wakefield. “That capital spans core, core-plus, value-add, development and platform strategies, with the big shift last year coming from the return of core capital.”

Investment in warehouses, workshops and other industrial facilities in Australia is set to reach around A$9 billion ($6.4 billion) this year – up from around A$8 billion in 2025, according to a new report from Iuliano’s team at the property consultancy.

The upswing in Australian logistics investment is due to a number of factors, including resurging consumer confidence and developers building fewer new warehouses, while the return of core investors to the sector is also predicted to contribute to double digit growth in investment in the market.

Core Capital Returns

Core investors are once again targeting Australian logistics as market fundamentals favour long-term income, according to Cushman & Wakefield’s findings. 

“Development of new projects in Australia has historically been pre-lease led, and due to feasibility constraints and financing conditions, developers are pivoting back to this approach,” Iuliano said. “The lower level of supply in the pipeline is motivating occupiers to sign new leases before availability begins to tighten, and the thinning pipeline is increasing confidence in leasing outcomes for investors.”

That thinning pipeline is happening as Australia’s surging housing market helped drive an estimated 6 percent increase in household spending on goods in 2025, as income growth and rising consumer confidence fuel spending which is helping to keep warehouses full, according to Cushman & Wakefield’s research.

With the strong fundamentals and economic tailwinds for Australian logistics, the sector continues to be compelling for global investors, according to Iuliano, a three-decade veteran of the industry. With the Reserve Bank of Australia’s cash rate now at 3.85 percent, compared to 4.10 percent early last year, more activity is expected in the core segment of the market this year, despite the central bank having raised interest rates by 25 basis points (to their current 3.85 percent) in February.

“Regarding core capital, its return is not being driven exclusively by rate cuts or increases, so minor adjustments in the near-term are not going to deter from Australian logistics’ value proposition,” Iuliano said. “Pricing outcomes are increasingly driven by income durability rather than the movement in yields, and with average vacancy in major east coast markets tightening in the coming years, this presents opportunities for investors across the spectrum.”

Global Players Get Involved

With respondents to an investor intentions survey published earlier this year by fund management industry association ANREV pointing to Australia as the top destination for deploying capital in Asia Pacific, the role of international investors in the country’s logistics market looks set to expand still further.  

“Almost 80 percent of the A$38 billion in capital targeting Australian logistics comes from overseas, with the traditional markets of the US, Canada and Singapore remaining dominant,” Iuliano said. “Capital out of Japan is also set to become much more active, particularly through development joint ventures.” 

The growing involvement of global heavyweights in Australia’s logistics sector was evident in Morgan Stanley Real Estate Investing (MSREI) in April 2025 establishing a partnership with Frasers Property Industrial targeting the Sydney and Brisbane markets.

With Iuliano’s team advising Frasers, the two companies established a 50-50 partnership for the Frasers Prime Logistics Venture, which is developing eight core industrial assets spanning 188,000 square metres at a projected value of approximately A$600 million.

Market Fundamentals Improve

Cushman & Wakefield’s report shows Australia’s logistics market gaining favour with investors largely due to improving supply and demand fundamentals, helped along by strong economic conditions. 

Both gross take-up and net absorption of logistics space in Australia exceeded expectations in 2025, according to the research, with occupiers expected to lease more than 2 million square metres more this year than they hand back to landlords – more than double last year’s absorption.

That rising demand comes as developer launches of new logistics projects in Australia this year are expected to fall more than 25 percent to less than 1 million square metres, with the total supply pipeline for 2027 and 2028 amounting to less than 850,000 square metres, according to the property consultancy’s figures.

That combination of rising occupier demand and falling supply is expected to tighten up a market which saw availability rise from 2022 through 2025. “Average vacancy nationwide should peak at just under 4.0 percent around the third quarter of this year, before tightening to 3.0 percent by the middle of 2027,” Iuliano said. 

Cushman & Wakefield expects available space to fall still further in Australia’s major east coast markets over the coming three years, with vacancy in Sydney projected to drop to 3.0 percent in 2028, while Brisbane and Melbourne will be below 2.5 percent that year, according to the consultancy’s forecast. 

After leasing rates for prime Australian logistics facilities grew at an average of 4.0 percent in 2025, C&W is predicting average annual growth in face rents of 4.0 percent over the coming three years, with that expected upturn potentially reaching an average of 4.6 percent, should pipeline projects fall behind schedule. 

To access the full report, please click here.