_3 hotspots picked for industrial property in 2026: Knight Frank’s Australian Horizon 2026 report

The report forecasts that prime vacancy in the industrial market will stabilise quickly in 2026 as construction falls and baseline tenant demand strengthens.

New industrial supply fell by 20% over 2025, from a high of 2.6 million square metres across the East Coast in 2024 to just over 2 million square metres this year.

“The forecast for 2026 is currently another step downward at 1.8 million square metres, however only two thirds of this has commenced construction and/or secured a pre-commitment,” said Knight Frank Partner, Research & Consulting, QLD Jennelle Wilson.

“Meanwhile, baseline tenant demand is expected to strengthen supported by stronger retail spending and construction into 2026, as well as the 3PL sectors, with a renewed focus on automation and delivery infrastructure. 

“This renewed demand will help underpin absorption rates for new and existing space, mitigating the impact of elevated vacancy in some precincts.” 

Knight Frank’s Australian Horizon 2026 report found that while the industrial market has experienced substantial rental uplift over the past five years, the past 12 months has seen higher supply, higher vacancy and a more conservative tenant market which has impacted effective rents. While face rents have been defended, the uplift in incentives has resulted in falling effective rents, particularly in Sydney and Melbourne.

Knight Frank Partner, National Head of Industrial Logistics James Templeton said: “There has been, and will continue to be, significant divergence between cities and precincts as vacancy becomes more concentrated in emerging areas with high development. 

“Established precincts with lower construction and vacancy have far more robust rental growth expectations than those that have seen a construction overshoot.”

Brisbane is predicted to have the highest net face rental growth over the next four years, while Adelaide is expected to have the lowest, after experiencing strong growth in recent years.

Infographic: Rent growth forecasts 2026-30 (CAGR)

The areas predicted in the report to be industrial hotspots this year are:

Brisbane Trade Coast

The Trade Coast is a strategic logistics hub, anchored by direct links to the Port of Brisbane, the Brisbane International Airport and major motorway networks. It continues to set the pace for Brisbane’s industrial market, benefitting from a substantial rental premium to the wider Brisbane market, while land values are also substantially higher due to a lack of available vacant freehold land. With limited new land and brownfield redevelopment/building repurposing still in its infancy, the Trade Coast is well placed for further rental growth which will widen the gap over other Brisbane locations.

Northwest Melbourne

Whilst historically the East was the centre of the Melbourne industrial market, the North and West are now becoming the dominant centres. With the East largely built out, modern stock elsewhere now obtains similar or higher face rents to the traditional industrial estates. The latest 10-year plan for industrial land released recently by the Victorian Government allocates nearly 80% of future unzoned supply to these two areas, with nothing for the East or Inner Southeast precincts, which confirms these areas as the future long-term hubs for industrial development going forward.

North Adelaide 

The Adelaide industrial market is in demand with yields having come in 30bps for prime assets over the past six months. The Inner North market is mostly built out, but rezoning in the Outer North has opened up opportunities. For instance, Mawson Park is proving popular on the back of its technology park. Though this is a small site, there have been several new leases linked to tenants involved in the AUKUS partnership.


Read the full report.