Industrial edges past office as Australia's biggest property sector
For most of the past two decades, office towers held the title of Australia's largest commercial property class by total capital value. That is changing this year. CBRE Research forecasts Australia's investable industrial and logistics universe will grow 48% to $424 billion by 2026, up from $286 billion, nudging past the investment-grade office market, which CBRE expects to reach only about $420 billion over the same period, up from $350 billion. Sydney alone accounts for roughly 44% of the country's industrial capital stock. It's the first time logistics property, much of it unglamorous warehouses and distribution sheds on the urban fringe, has out-valued the office towers that have anchored Australian CBDs since the 1980s.
Vacancy tells the same story, in miniature
The vacancy figures back up the capital-value shift. JLL's second-quarter 2026 data put the national industrial vacancy rate at 4.8%, down from 5.0% the previous quarter, with Perth the tightest major market at 2.2% and Sydney the loosest of the big three at 5.8%. CBRE's own measure, which uses a narrower definition of investment-grade stock, recorded national industrial vacancy at 3.2% in the first half of 2026, and Colliers logged a compression to 3.8% in the March quarter, with Melbourne the tightest market on the east coast. The three research houses don't agree on the exact number, since each measures a slightly different pool of stock, but they agree on the direction: industrial vacancy nationally sits in the low-to-mid single digits. Office tells a different story. JLL puts the national CBD office vacancy rate at 15.3%, unchanged over the 2025-26 financial year, with Sydney's headline rate down to 13.9% (its lowest since early 2023) and Melbourne stuck at 20.5%. An investor choosing between the two sectors today is choosing between a market where roughly one in twenty industrial sheds sits empty, and one where, in Melbourne's case, roughly one in five office floors does.
E-commerce and a shrinking pipeline of new sheds
The tightness is being driven from both sides of the ledger. On the demand side, CBRE research attributes an average of 25% of industrial and logistics occupier demand along the eastern seaboard over the past three years to e-commerce alone, as online shopping's share of total Australian retail sales climbs from around 13% toward a forecast 15% by late 2026. Every extra percentage point of online sales pulls through more warehouse space per dollar of turnover than a physical shop does, since goods need to be picked, packed and dispatched rather than simply shelved. On the supply side, Colliers recorded industrial take-up easing to 287,000 sqm nationally in the March quarter of 2026, but noted that speculative development, building sheds ahead of signing a tenant, had largely wound down by the end of 2025, pushing leasing activity onto existing stock, which made up almost 69% of take-up in the quarter, the highest share in several years. Savills' Australian Spotlight on 2026 estimates roughly $38 billion of investor capital is currently targeting Australian logistics assets, part of a broader $50 billion-plus wave of capital it expects to move into Australian commercial property this year, chasing a shrinking pool of available space.
A deal that shows where that capital is actually landing
The clearest illustration of that hunt for logistics assets landed in Brisbane in mid-2026. Charter Hall, buying on behalf of its newly established Charter Hall Industrial Partnership 6, paid $192.4 million for three logistics properties south-west of Brisbane. The centrepiece was a roughly 22,000 sqm Australia Post distribution and freight facility at 39 Gravel Pit Road, Darra, bought for $70.15 million on an initial yield of just 5.75%, secured by a new 10-year triple-net lease with Australia Post's freight arm, StarTrack, staying on as the operating tenant. The other two assets, an industrial outdoor storage site at Willawong pre-committed to PrixCar for $74.5 million and a distribution centre at Acacia Ridge for $47.75 million, filled out the portfolio. What makes the Darra deal notable isn't just the tight yield, it's the seller. Australia Post put the site up for sale as part of a wider release of seven logistics facilities in mid-2026, as it works to repurpose or exit property it no longer needs while its core letters business keeps shrinking. A government-owned operator retreating from logistics real estate it built for a bigger mail network sold straight into the hands of an institutional buyer willing to pay a sub-6% yield for the income, which is about as direct a readout of investor appetite for logistics as the market currently produces.
The gap isn't guaranteed to keep widening
None of this makes industrial immune to the broader property cycle. CBRE's national super-prime industrial yield sat at 5.7% in the first quarter of 2026, having expanded slightly as elevated bond yields pushed pricing out across every sector, and it moved only marginally through the June quarter. Rental growth has also cooled from its post-pandemic peak: Colliers recorded prime industrial rents rising just 0.2% for the March quarter to $273 per sqm, and JLL noted that rental growth in Sydney specifically had stalled in the June quarter, weighed down by elevated vacancy in some precincts and tenants taking longer to commit. CBRE expects national vacancy to keep drifting up before peaking near 3.5% in the second half of 2026, as supply committed a year or two ago continues to settle into the market. The direction of travel still favours industrial over office by a wide margin, but the sector is cooling from an extraordinary run rather than accelerating indefinitely.