Take-up levels rebound

• Gross take-up increased by 48.0% q-o-q to approximately 424,400 sqm. This was 46.5% above the ten-year quarterly average. The West precinct accounted for the largest portion of quarterly leasing activity, with 56.4% of Melbourne’s gross take-up.
• Demand was led by the Manufacturing sector, accounting for 40.7% of take-up, followed by the Transport, Postal & Warehousing sector, comprising 29.6%, which has, interestingly, seen two consecutive quarters of subdued occupier demand.

Elevated quarterly supply leads to near-record year

• New supply brought around 294,000 sqm of warehouse space to the market, 69.0% more than the ten-year quarterly average. Of the supply, 62.6% was pre-committed at practical completion. This year saw the second-highest annual completion rate in JLL history, behind only 2022.
• The largest portion of quarterly supply was delivered in the North precinct (37.0%), halting a trend that has seen the West hold the largest quarterly completion levels for the last two years. The South East followed with 34.0%, and the West precinct with 29.0%.

Rents, yields and incentives stabilise

• In Q4, rents across all grades and precincts remained relatively stable as we continued to see rising vacancy levels affect supply-demand dynamics. Incentives also remained stable in all precincts except the North, which saw a small increase.
• Transaction volume totalled AUD 562.3 million over the quarter. Significantly, 2024’s total transaction volume of AUD 3.8 billion represents the highest annual industrial transaction volume ever documented by JLL research.

Outlook: A more nuanced market

• With only 47.7% of the 777,800 sqm under construction and set to complete in the next 12 months (in Melbourne) being pre-committed, an increase in vacancy rates is anticipated.
• Developers delayed speculative projects in 2024, awaiting pre-commitments due to high completion rates. While we anticipate a medium-term rebalancing of supply-demand dynamics due to this pause, we foresee limited rent growth in the near-term.