Sydney industrial vacancy rises as leasing stays resilient
Sydney’s logistics and industrial market recorded resilient occupier demand in the third quarter of 2026, even as the vacancy rate edged higher to 3.9% and landlords faced greater competition in selected parts of the market.
Cushman & Wakefield reported approximately 290,000 square metres of gross take-up during Q3, taking 2026 leasing volumes to just over 1.0 million square metres. Net absorption remained positive at almost 120,000 square metres for the quarter and 315,000 square metres for the year to date.
Leasing demand remains concentrated in Western Sydney
The Outer West generated the largest share of net absorption, supported by recent commitments at GPT’s Yiribana West Logistics Estate and the Stockland/Fife Kemps Creek Industrial Estate. Multi-level warehouse space in infill locations also continued to attract occupier demand.
The report said operational requirements such as consolidation, network optimisation and efficiency improvements continued to support leasing. Transport and logistics occupiers remained active, while demand also increased from businesses operating alongside the data centre sector.
Vacancy increased only modestly to 3.9%, with continued leasing partly offsetting speculative completions and secondary backfill space. Availability was concentrated, with 10 facilities or estates accounting for almost one-quarter of current leasing options. Larger facilities in Western Sydney represented a disproportionate share of available space, while smaller prime-grade properties remained more constrained.
Rental growth pauses after earlier surge
Prime net face rents were broadly unchanged through the quarter and had largely stabilised over the preceding 12 months. Cushman & Wakefield noted that occupiers were adjusting after Sydney prime rents rose 90% between 2020 and 2025.
Incentives remained elevated and averaged above 20% in several submarkets. The report said landlords were increasingly using incentives to preserve face rents, contributing to a wider difference between face and effective rental performance.
The market’s near-term supply pipeline remained substantial, with about 800,000 square metres under construction, including almost 200,000 square metres of speculative space. Speculative completions were expected to exceed 440,000 square metres in 2026, with a further 400,000 square metres possible in 2027. However, 65% of the 2027 pipeline had yet to commence construction and delays were considered likely.
Investors remain selective on quality and income
Sydney industrial yields were stable during Q3 despite the higher interest-rate environment. Investor demand was strongest for prime assets with secure income, modern specifications and strategic locations, while assets carrying leasing, capital expenditure or obsolescence risks faced greater pricing scrutiny.
Investment volumes exceeded $1.7 billion in 2026, excluding Goodman’s acquisition of Brickworks’ 50% interest in BGAI. Major Q3 transactions included Holdmark Group’s $110 million acquisition of 2a Factory Street, Granville from Australia Post through a sale and leaseback, while Stockland extended its partnership with M&G, including the Coopers Paddock estate at Warwick Farm.
Industrial land values were steady in Q3. Average pricing for one-to-five-hectare lots across Western Sydney was $1,522 per square metre, compared with about $3,225 per square metre in South Sydney. The report said serviced, development-ready land remained constrained, supporting pricing for sites with a clear path to development.
SOURCE ATTRIBUTION:
Based on reporting by Cushman & Wakefield in MarketBeat: Sydney Logistics & Industrial Q3 2026.
