The window is open: why industrial occupiers should move before the market tightens

For the first time in more than five years, Australia's industrial leasing market has swung back in favour of occupiers.

After an extended period where record-low vacancy and rapidly rising rents left tenants with little negotiating power, conditions have become more balanced. Vacancy has normalised across most major industrial markets, rental growth has moderated and occupiers once again have genuine choice when assessing their next lease decision.

For many businesses, it presents a rare opportunity to rethink their industrial footprint, improve the quality of their facilities and negotiate more favourable commercial outcomes.

However, according to Cushman & Wakefield, the current balance between landlords and tenants is unlikely to last.

While today's leasing environment feels relatively comfortable, the longer-term supply outlook is becoming increasingly constrained. Australia's industrial development pipeline is shrinking rapidly as higher construction costs, tighter funding conditions and project feasibility challenges delay new developments.

Supply scheduled to complete in 2026 is expected to fall to its lowest level since 2018, with a meaningful uplift in new stock not anticipated until at least 2029.

At the same time, national vacancy is forecast to peak before beginning a gradual decline as fewer new facilities enter the market. Alastair Evans, Associate Director, Brokerage, Logistics & Industrial, NSW at Cushman & Wakefield, said many occupiers may not appreciate how favourable current conditions are until the opportunity has passed.
"Industrial occupiers are in a position we haven't seen since before the pandemic. Businesses have more choice, landlords are prepared to negotiate and rental growth has stabilised across many markets. That combination creates a genuine opportunity for occupiers to improve the quality and efficiency of their operations while securing more favourable lease outcomes."
The changing supply picture means today's leasing decisions should be viewed through a long-term lens rather than current market conditions alone.

Mr Evans said "Demand has also remained stronger than anticipated throughout 2026, underpinned by occupier consolidation, continued growth from third-party logistics providers and increasing activity associated with data centre infrastructure. As demand continues to recover while new supply slows, competition for quality industrial assets is expected to intensify once again across many of Australia's prime logistics precincts".

For businesses with lease expiries over the next 12 to 24 months, the message is becoming increasingly clear: act before the balance of power shifts.

Mr Evans went on to say businesses that engage with the market early are likely to achieve materially better outcomes than those that wait until vacancy tightens again.
"Once vacancy begins to fall and development activity remains constrained, negotiating leverage will inevitably return to landlords. Occupiers that start planning now will have access to more options, stronger commercial terms and facilities that better support their long-term operational requirements."
Rather than simply renewing existing leases, many businesses are now using the current environment to reassess their entire industrial network, consolidating facilities, upgrading accommodation and improving operational efficiencies.

History suggests these market windows rarely remain open for long. As supply contracts and demand continues to strengthen, today's balanced conditions are likely to become increasingly difficult to find.

Mr Evans said "For industrial occupiers, that makes the current leasing environment something of a sweet spot, one where choice remains available, landlords remain motivated and strategic decisions made today could deliver long-term competitive advantages well beyond the next leasing cycle".