_What is shaping industrial markets around Australia?

In Western Australia, the industrial sector is experiencing sustained demand and intensifying land constraints driven by mining, energy, renewables and, increasingly, defence-related activity. Knight Frank’s Head of Industrial Logistics, WA Geoff Thomson has seen significant government investment alongside international contractor involvement accelerating competition for industrial land and facilities across the state, particularly across southern precincts, driving values sharply higher and reinforcing the scarcity now defining the market. The breadth of industries supporting the market has created a uniquely resilient industrial environment, with demand for both land and existing assets continuing to outpace supply.

That pressure on industrial land is not isolated to Perth. Knight Frank’s Head of Investment Sales SA Chet Al points to a challenge that has evolved beyond development pipelines and into infrastructure delivery itself within South Australia. Adelaide’s established industrial precincts are nearing capacity, while constraints around power, water and serviced land are increasingly limiting new supply. It is a pattern now emerging nationally as access to serviced industrial land is becoming one of the defining economic questions for Australia’s future supply chains.

At the same time, occupier priorities are evolving in other parts of the country. Knight Frank Head of Industrial Logistics, Victoria Joel Davy notes that businesses are placing greater emphasis on operational efficiency and consolidation within Victoria, seeking warehouse solutions that support productivity, automation and smarter use of space rather than simple expansion. As transport costs and outgoings rise, warehouse cubic capacity is becoming an increasingly important consideration, with operators adopting smarter racking systems and higher-clearance facilities to maximise efficiency within smaller footprints. Mr Davy has also seen a spike in demand within the housing and construction sector, where modular builders and building-material suppliers continue to play an important role in supporting the state’s housing pipeline.

In New South Wales, digital infrastructure is one of the market’s fastest-growing industrial demand drivers. The rapid expansion of data centres, fuelled by AI and enterprise digitisation, is reshaping competition for industrial land across Sydney, particularly sites with access to power and connectivity. Knight Frank Head of Industrial Logistics, NSW Orlando Maciel highlights an increase in industrial markets that are no longer serving freight and logistics networks, but also the digital systems underpinning the modern economy.

Further north, Queensland appears poised for its next wave of industrial expansion with tightening vacancy levels, sustained population growth and the long runway of Olympic-led development. Knight Frank Head of Industrial Logistics, Queensland Mark Clifford said together this is beginning to shift demand toward more specialised industrial facilities, including manufacturing and production-focused assets requiring low site coverage and gantry cranes. For developers and landowners, the opportunity is no longer limited to traditional warehousing, with the shift creating scope to broaden their business models and diversify industrial offerings.

What emerges is a sector adapting quickly to the pressures of a changing economy. Rising demand for AI and digital infrastructure, alongside the need for smarter storage solutions and more efficient use of limited industrial land, is informing how industrial and logistics assets are designed, occupied and valued.

This article is from Knight Frank’s SPACE industrial and Logistics publication, set to be released today.