As we look towards the end of 2025 and into 2026, It’s expected that improving domestic factors like lower interest rates and inflation levels will translate to increased consumer spending. However, this increased retail trade is unlikely to materialise to a tangible uplift in occupier activity over the short-term. Inventory levels from traditional retailers, e-commerce operators, and wholesalers are in balance for the current retailing environment, and it can be expected that only sustained above-average consumption will support expansionary activity.

We expect that efficiency and consolidation will continue to be a key driver of pre-lease activity over the next 12 months. Organisations are increasingly focussed on the cost, efficiency and technology capabilities of every part of its supply chain, which is translating into occupiers seeking modern facilities along major transport corridors and relinquishing ageing, inefficient warehousing outside of key freight networks.

Supply will slow from the robust levels recorded over the past 12 months as developer appetite for speculative development weakens and occupier demand trends lower. Completions will remain relatively robust in Sydney and Melbourne, but a significant decrease is expected in Brisbane after back-to-back record years in 2023 and 2024.

In the leasing markets, we expect that the sharp escalation in incentives recorded over the last 12 months will plateau, which will support moderate growth in effective rental levels along the east coast. Average face rental growth and stable incentives in Adelaide and Perth will maintain effective rental growth in those markets.

Investor demand for industrial assets is likely to support further yield compression as we move into 2026. Despite the recent volatility in Australia’s economy, the fundamentals that support the logistics and industrial sector – population growth, retail trade, and economic growth – are trending the right way. This is expected to encourage further investment into the sector over the next 12 months.