Industrial Real Estate Market Analysis: Q1 2026 - JLL Research

JLL Research's comprehensive Industrial Vacancy and Supply update reveals some stability in occupancy along Australia’s eastern seaboard after a period of increasing vacancy over the past six months. The vacancy rate in the Sydney, Melbourne and Brisbane markets was broadly unchanged in Q1 2026 while the vacancy rate in Perth and Adelaide increased over the quarter. Sydney remains the market with the highest overall vacancy at 5.8%. Meanwhile, Perth maintained Australia's lowest industrial vacancy rate at just 2.0%.

• Sydney: 5.8% vacancy across 23.5 million sqm
• Melbourne: 5.2% vacancy across 30.6 million sqm (Australia's largest market)
• Brisbane: 5.3% vacancy across 13.8 million sqm
• Perth: 2.0% vacancy (lowest nationally) across 7.6 million sqm
• Adelaide: 4.5% vacancy across 5.5 million sqm

In Melbourne, vacancy trends were mixed. In the the South East precinct, which remains the tightest in Melbourne (>1,000,000 sqm), vacancy increased by 1.1 percentage points to 4.6% and has increased 2.7 percentage points over the past 12 months. The vacancy rate in Melbourne’s North precinct decreased for the first time in two years to 6.1% following on from a period of strong speculative supply. The vacancy rate in the West precinct (5.2% in Q1 2026) has been broadly stable for the last 12 months, hovering between 5.2% - 5-4% since Q2 2025.

In Sydney, vacancy in most precincts trended down over the quarter. The Inner West precinct decreased by 1.2 percentage points to 3.8%. Vacancy in South Sydney, which reached double-figures last quarter, decreased to 9.1%. In the outer western precincts, moderate vacancy decreases in the Outer South West (5.5%) and Outer North West (5.1%) was counterbalanced by an increase in vacancy in Sydney’s largest precinct, Outer Central West, which reached 6.6% over the quarter.

Vacancy was broadly stable in Brisbane with a decrease in vacancy in the North precinct (-0.6 pps to 4.3%) balanced by moderate increases in vacancy in the Southern (0.1 pps to 5.6%) and Trade Coast (0.2 pps to 5.1%) precincts.

The vacancy rate in the non-eastern seaboard markets of Perth and Adelaide remain lower than the national vacancy rate. Although vacancy increased 0.3 pps to 2.0% in Perth over the quarter, it remains the tightest vacancy rate in Australia. The vacancy rate across all of Adelaide’s precincts increased in Q1 2026, resulting in a 1.3 pps increase to 4.5%.

Sub-lease vacancy rates decreased in Australia’s largest two industrial markets, Sydney and Melbourne, reaching 1.1% and 1.0% in Q1 2026 respectively. Brisbane, Perth and Adelaide sublease vacancy is very low accounting for less than 0.3% of all stock.

JLL's analysis reveals that vacancy within the medium-to-large building size cohort (10,000-30,000 sqm) remains the highest of all the size cohorts nationally, reaching 6.4% in Q1 2026. The has been driven largely by ongoing speculative development within the size cohort, particularly along the eastern seaboard. Leasing demand for larger space increased over the quarter with the vacancy rates for both 30,000-45,000 sqm and 45,000+ sqm size cohorts decreasing in Q1 2026. The vacancy rate in the 45,000+ sqm size cohort is the tightest nationally at 2.9%.

The upwards trajectory of Australia’s industrial vacancy rate is expected to continue over the next 12 months, but not at the accelerated pace recorded in 2025. Occupier demand remains resilient but the downside risks of global conflict and the resultant inflationary pressures materialising domestically could weigh on occupier expansionary decisions over the short term.

Occupiers will continue to look to improve business efficiencies through accommodation and will opportunistically look to upgrade facilities. As a result, the higher vacancy risk is expected in secondary grade space.

JLL Research tracks over 81.0 million sqm of industrial stock nationally, providing crucial market insights into Australia’s industrial market dynamics by precinct, suburb, and building size.