National industrial vacancy falls to 4.8% as demand absorbs speculative stock

JLL Research shows industrial vacancy falling in most markets in Q2 2026. Perth is tightest at 2.2%, Sydney highest at 5.8% and Melbourne's west steady at 5.4%.

Australia’s national industrial vacancy rate fell to 4.8% in Q2 2026, down from 5.0% in the previous quarter, according to JLL Research. Vacancy fell in most markets as tenants leased speculative warehouse space built over the past two years. Perth remains the tightest market at 2.2%, while Sydney is the highest at 5.8%.

According to the latest JLL Research Industrial Vacancy and Supply update, vacancy rates across most markets nationally trended downwards over the quarter, with Perth maintaining its position as the tightest market despite a slight quarterly increase.

Sydney: highest vacancy, mixed precinct results

Sydney recorded the highest vacancy rate nationally at 5.8% across 23.5 million square metres of stock. The city saw mixed results at precinct level, with the Outer North West decreasing 1.9 percentage points to 3.3% and South Sydney falling 0.5 percentage points to 8.6%. However, these gains were offset by increases in the Outer South West and Inner West precincts.

Melbourne: City Fringe tightens, the West holds steady

Melbourne, Australia’s largest industrial market with 30.6 million square metres of stock, recorded a vacancy rate of 4.9%. The City Fringe precinct saw the largest quarterly decrease, dropping 3.2 percentage points to 3.4% in Q2 2026. Vacancy also decreased in the North and South East precincts, while the West precinct remained broadly stable at 5.4%.

The West precinct takes in the large logistics and warehousing hubs across Melbourne’s western suburbs, close to the port, the freight rail network and the Western Ring Road. For owner-occupiers and investors in the area, a rate a little above the city average can mean more choice of space and more room to negotiate on leases, depending on the size and grade of the building.

Brisbane records the largest fall

Brisbane delivered the largest decrease in quarterly vacancy nationally. The vacancy rate decreased in both the Southern precinct, falling 1.4 percentage points to 4.2%, and the Trade Coast precinct, dropping 1.0 percentage points to 4.1%. The city’s overall vacancy rate now sits at 4.5% across 14.0 million square metres.

Adelaide and Perth

Adelaide’s vacancy rate decreased 0.7 percentage points to 3.8% across 5.7 million square metres, with most precincts recording improvements during the quarter. Perth remains the tightest industrial market in the country at 2.2%.

New supply and occupier demand

JLL Research tracks over 81.5 million square metres of industrial stock nationally. As at Q2 2026, a total of 2.1 million square metres of industrial warehouse is currently under construction nationally, to be delivered largely over the next 18 months.

The research indicates that occupier demand continues to exceed expectations, with elevated leasing deal flows in 2026 continuing to incrementally absorb speculative warehouse space introduced to market over the past two years. Speculative space is built without a tenant signed up in advance, so a fall in vacancy while that space is still being delivered points to solid demand from occupiers.

The shift fits a broader trend of the industrial market moving from expansion to strategic consolidation, and follows earlier concerns about the online retail slowdown and the industrial outlook. Prological’s Q1 figures showed the same trend, with industrial vacancy falling for the first time in two years as developers cut speculative supply.

Risks on the horizon

However, challenges loom on the horizon. The ongoing US-led global conflict in Iran and the resultant inflationary pressures on fuel domestically could negatively impact logistics business profitability over the short term as current petrol contract pricing ends and new contracts are negotiated.

Despite these concerns, occupiers are expected to continue looking to improve business efficiencies through accommodation and will opportunistically look to upgrade facilities. As a result, the higher vacancy risk is expected in secondary grade space.

For investors, that split matters. Modern, well-located warehouses with good access, clearance height and hardstand may hold up better than older secondary stock, which could face longer vacancies as tenants upgrade.

Buying a warehouse or factory: what to consider

Whether you’re buying industrial property to run your own business from or as an investment, lenders look at the property and your position together. Points to check include:

• Owner-occupier or investor. If your business will occupy the building, lenders assess your business financials. If it’s leased, they focus on the tenant, the lease term and the rental income.
• Grade and location. JLL’s comments suggest secondary grade space carries more vacancy risk, which can affect both valuation and how a lender views the security.
• Lease terms. Lease length, rent reviews and who pays outgoings shape the income and the property’s value.
• Deposit and costs. Commercial lenders usually lend a lower share of the property value than home loan lenders, and you’ll need to cover stamp duty and other purchase costs.

Specialised industrial assets such as data centres in Melbourne have their own lending considerations. Regional centres are also drawing investment, as our report on regional commercial property hitting $6.2 billion shows.

A broker can compare commercial property loans for warehouses and factories across a range of lenders. If you need to fit out the building, business equipment loans can fund forklifts, racking and machinery separately from the property. Attain Loans is a finance broker in Melbourne’s west that works with business owners and investors across the western industrial suburbs, subject to each lender’s assessment.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Consider whether it’s appropriate for you and speak with a licensed professional before making a decision.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.