Brisbane the only East Coast city to see a reduction in industrial vacancy in Q4 last year

The firm’s Australian Industrial Review Q4 2024 found vacancy in Brisbane’s industrial market fell by 4.7% in Q4 last year to 648,379sq m or a vacancy rate of 4.3%, led by a greater take up in existing stock.

In comparison, Melbourne’s vacancy rate rose by 95,624sq m% to 3.3%, while Sydney’s vacancy increased by 21,995sq m to 2%.

Despite a slight fall in Q4, vacancy in Brisbane’s industrial market remains elevated – sitting at 46% above the five-year average - due to the combination of backfill space and new speculative development starts.

Across the East Coast cities of Sydney, Melbourne and Brisbane, vacancy rose by 4% over Q4 and now sits 33% above the 10-year average due to record development completions over 2.6 million square metres last year, but despite this it is now considered to be back in line with long-term levels after the extreme lows of 2022-2024.

As Knight Frank’s Australian Horizon 2025 report, released at the end of 2024, predicted, there has been a deepening divergence in vacancy rates and rental performance in Australia’s industrial market depending on location and supply levels in different precincts.

In Brisbane, the South East remains the tightest major market with only 33,000sq m available, most of which is sublease space. The Greater North market has the lowest vacancy rate of 1.2% for assets of 3,000sq m plus, with the stock remaining skewed towards smaller occupiers.

With some of the tightest vacancy, the South East saw rents rise by 11.3% in 2024, while the sought after Trade Coast had the highest rental growth of 14%. Meanwhile, in the South, where the greatest vacancy is, rents rose by 2.9% last year.

Prime net effective rent growth in 2024 in Brisbane precincts:

Over 2024 Brisbane prime rents rose by 7.2% on average, the second highest after Adelaide at 12.1%. Melbourne (6.7%) was next, followed by Perth (6.1%) and Sydney (3.9%).

Knight Frank Head of Industrial Logistics Queensland Mark Clifford said tenant activity had slowed a little at the end of last year but activity over 2024 was still 7% higher than 2023 and 9% above the five-year average.

“Transport, postal and warehouse tenants were the most active over 2024, accounting for more than one third of take up.

“In general, car retailers and delivery partners have been particularly active in the market both for improved and hardstand facilities.

“The end of 2024 saw a slow down in decision making processes due to general market uncertainty around whether the market would see an interest rate cut. Now that this has happened we believe occupiers may act with more confidence and commit to moving forward on their property strategies.

“We have seen a reasonably strong start in 2025 in terms of enquiry levels and occupier interest in prime grade space in particular. We are expecting to see this translate into leasing deals over the coming months.”

Knight Frank Partner, Research and Consulting Queensland Jennelle Wilson said new supply in Brisbane’s industrial market was expected to be slightly lower in 2025 (567,257sq m) than in 2024 (just over 660,832sq m).

“2025 supply will again be dominated by speculative projects which account for 58% of currently expected supply, while a further 34% is pre-committed and 8% owner-occupied.

“The South precinct is expected to deliver 42% of total supply for Brisbane during 2025.

“With supply to moderate in 2025, particularly as speculative construction slows, the market is expected to return to balance relatively quickly with tenants remaining attracted to quality new product.

“Effective rents for existing or secondary product may come under pressure over the year due to increasing incentives in the market.”

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