With 29.5m sqm of warehouses versus Sydney’s 23.1m sqm, Melbourne is the largest logistics and industrial market.

Projections suggest demand for 2.6m sqm of industrial space over five years, however, by 2028 there will be a 1m sqm shortfall of required stock, JLL has found. Plans to double container throughput to 6m TEU (a measurement of container capacity; A 20-foot container is 1 TEU) each year by 2035 at Australia’s largest port, the Port of Melbourne, will also boost demand.

“It costs half as much to lease a warehouse in Melbourne compared to Sydney, which has many large occupiers believing Melbourne will become the preferred location for national distribution centres,” says James Jorgensen, JLL’s head of logistics and industrial, Victoria.

While Melbourne is experiencing challenges with planning and infrastructure delivery, those challenges are far greater in Sydney, Jorgensen notes. Additionally, offshore capital is currently carrying a foreign owner’s land tax surcharge. “But that just means local capital is in pole position.”

Greystar, Home, Local and Mirvac all delivering major projects in the build to rent (BTR) sector in Melbourne is evidence of its ability to support housing delivery at scale, says Jack Bergin, JLL’s head of living.

Melbourne has 60% of Australia’s overall BTR supply in part due to very high migration and the availability of well-located high-density sites in and around the CBD.

Still, it’s not enough to offset the decline in build-to-sell housing and will provide only limited relief to the rental market. Total inner Melbourne housing supply between 2024 and 2028 is expected to be only around 4,400 per annum – around 25% less than in the decade to 2023.

“Despite short-term headwinds for the housing market until interest rate cuts arrive, developers remain confident in a simple assumption: that total housing supply is going to fall well short of underlying demand from strong population growth over the next five years,” Bergin says.