Australia’s industrial sector is showing renewed strength, with leasing and investment activity gaining momentum after a cautious start to the year.

Savills Research recently released its Q2 2025 Industrial Shed Briefing, which shows key indicators like rising pre-commitments, stabilising vacancy, and a resurgence of institutional capital, are pointing to a market that’s rebalancing with occupier demand remaining robust, particularly for larger-format spaces.

“We’re seeing confidence come back into the market with pre-leasing activity picking up, capital starting to move again, and occupiers getting ahead of future growth,” says Michael Wall, National Head of Industrial & Logistics. “There’s a definite shift toward quality, and those offering scale, flexibility, and future-ready space are in the strongest position to capitalise.”

What’s driving it?

1. Demand is bouncing back, especially for larger space.

Pre-leasing is on the rise, making up about 40% of all deals in Q2 and that figure climbs to over 50% when you include speculative leasing. The trend is clearest on the East Coast, where nearly 990,000 sqm of space was leased last quarter; examples of this include Kmart taking 100,000 sqm in Moorebank, and Bunnings anchoring major pre-commits in Brisbane.

2. Vacancy is tight and getting tighter.

While there’s a bit of breathing room in the 10,000–20,000 sqm bracket, spaces under 10,000 sqm are becoming increasingly difficult to find. In Brisbane’s Southeast, for example, vacancy in this size range is virtually zero, providing landlords with more leverage - and rents are starting to reflect that.

3. Capital is flowing again.

Q2 saw $2.8 billion in investment transactions (>$10M), and institutional capital is returning, accounting for 54% of all deals. We’re seeing more joint ventures and cross-border partnerships too like Frasers & Morgan Stanley’s $600M portfolio buy, or BGO & Centuria’s Sydney warehouse deal.

“The market looks to be working through its reset and what we’re seeing now is the window starting to close in key locations like Sydney and Brisbane. Pricing is already firming, and the opportunity to get in ahead of that is narrowing,’ Michael said.

So what does this all mean?

The market is rebalancing, and savvy occupiers and investors are already making their move, so if you’re waiting for the ‘perfect moment,’ you might miss it. This isn’t just a recovery, it’s a reset - and one that’s favouring those who are proactive, not reactive.

Disclaimers:

The postings by any individual on any blog do not necessarily represent the position of Savills, its strategies or opinions.