Shed size drives Australia’s East Coast industrial vacancy

Headline figures show industrial vacancy is rising on Australia's East Coast. However, granular data reveals that building size and grade significantly impacts asset risk and opportunity profiles. 

Figure 1: Quarterly change in vacancy (pps) by building size cohort

Note: size of bubble determined by magnitude of change
Source: JLL Research as at Q2 2025

In Q2 2025, we observed distinct patterns between size cohorts (figure 1). Vacancy remained stable or declined in the smaller size segments of 5,000-10,000 sqm, and similarly in the large segments of 30,000-45,000 sqm and 45,000 sqm+. Sydney’s 5,000-10,000 sqm segment saw vacancy decrease by 1.4 percentage points (pps) over the quarter, while Brisbane's 30,000- 45,000 sqm cohort recorded a 1.5 pps decline.

Demand data reveals key drivers behind these trends. In 2025 to date, we have seen an uptick in the proportion of gross take-up (>5,000sqm) at the bookends of the size spectrum.

Spaces below 10,000 sqm accounted for 30.5% of area leased, compared to the 10-year average of 26.8%. In a challenging business environment, smaller facilities attract higher enquiry levels with a larger tenant pool able to lease smaller spaces, driving the decrease in vacancy for this cohort.

Deals over 45,000 sqm contributed 18.1% of gross take-up on the east coast in 2025 to date, relative to the 10-year average of 12.4%. Importantly, all of these transactions were pre-leases of new developments. Over the past decade, 81.8% of deals over 45,000 sqm were either pre-leases or built-to-suit by owner occupiers, decreasing speculative supply-side risks for this cohort.

These deals typically involve long lease terms, meaning ‘big-box’ developments present both opportunity and risk to industrial developers. Only a limited number of developers can build warehouses of this scale and capture the steady income from the blue-chip customers they provide. However, in the 45,000 sqm+ segment, prime grade assets (between 5-15 years old) show the highest vacancy at 6.9% on the east coast, compared to 4.4% for super prime grade (less than 5 years old). This reflects the challenge of leasing space of this scale after tenant relocation and may present obsolescence risk earlier in the asset lifecycle if tenants upgrade at the end of the first or second term.

Buildings ranging between 20,000 to 30,000 sqm recorded the largest quarterly vacancy increases: 3.6 pps in Sydney, 1.7 pps in Melbourne, and 1.8 pps in Brisbane.

While leasing in this size segment remains aligned with long-term averages, mid-sized speculative development completions have increased in 2025. Over the past 10 years, developments in this cohort have been 75.2% pre-leased by completion. In 2025, just 29.4% of newly completed stock was absorbed by completion, with Sydney and Brisbane’s quarterly vacancy increases driven by four speculative assets completing in each market between 20,000 -30,000 sqm.

A further 10 assets in this size cohort are expected to complete in the east coast markets by the end of 2025, currently 46.2% absorbed by area. This may drive vacancy higher in this size segment.

While headline vacancy figures provide a useful market overview, the underlying story reveals distinct opportunities and challenges that vary significantly by building size and grade.