Australia’s industrial and logistics sector is expected to regain momentum in 2026 following a year of increased investment activity and record levels of new supply, according to Colliers’ latest Industrial and Logistics Investment Review.
National direct investment volumes reached $8.3 billion in 2025, up from $6.9 billion in 2024, marking the second consecutive annual increase. A total of 264 transactions were completed nationally, with an average deal size of $31.5 million. Colliers attributes the uplift in activity to improving investor confidence following three interest rate cuts and stabilising debt conditions.
Vacancy rates remained low by global standards throughout 2025, supported by sustained occupier demand and ongoing rental growth. While leasing activity moderated under broader economic pressures, rental growth continued to offset earlier yield softening, helping to stabilise total returns.
Yield compression gathered pace during the year, with prime yields tightening by 14 basis points and secondary yields by 29 basis points. Core and core-plus investment strategies accounted for 65 per cent of total volumes. Outer-ring locations overtook infill markets for the first time, representing 54 per cent of transactions nationally.
Domestic investors accounted for more than 87 per cent of investment activity, with offshore capital increasingly participating through local managers. Queensland recorded its highest-ever industrial and logistics investment volumes and moved ahead of Victoria to rank second nationally, while New South Wales maintained the largest share of transactions.
Colliers forecasts vacancy to remain near cyclical peaks through 2026 as new speculative supply is absorbed, before tightening over the following 12 to 18 months. Although 2026 is expected to deliver the largest volume of new industrial space on record, the supply pipeline is forecast to normalise from 2027, driven by increased pre-commitment and redevelopment of older stock.
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