Adelaide market
Occupier activity in Adelaide has slowed compared to the last two years. And while organic demand has moderated, the lower gross take-up figures can partly be attributed to a limited number of relocation options available in the market. As at Q2 2025, the vacancy rate of 3.0% and is weighted towards secondary grade space. This tight leasing environment has been compounded by a parallel demand spike caused by the displacement of businesses located within over 500 buildings compulsorily acquired by the Government of South Australia for the ongoing North-South Corridor infrastructure project.
Developers are responding to this supply-demand mismatch with warehouse completions over the past 12 months reaching 162,500 sqm – well above the long-term, 10-year average of 91,800 sqm. This limited availability of warehouse space is also supporting rental growth. Over the 12 months, average prime net face rents in Adelaide’s North West precinct have increased 18.9% year-on-year, compared to the blended average national prime face net rental growth of 4.9%. However, unlike most other markets, investor demand has softened year-on-year. Over the 12 months to Q2 2025, transaction volumes reached AUD 460.1 million, compared to AUD 673.5 million over the previous 12 month period from Q3 2023 to Q2 2024.
Looking forward, it is expected that occupier demand will improve in line with the broader economy. More leasing options are likely to materialise over the short-term as some large national developers have now commenced speculative supply to alleviate the tight vacancy environment. However, it’s expected that average prime rental growth will continue to outpace national growth. Investor demand will be positive. However, transaction volumes will remain dependent on the ability to unlock product in a tightly held market.