Recovery in pre-lease activity

• Occupier demand increased 16.8% over the quarter to 342,000 sqm, 44.3% above the ten-year quarterly average, driven by a recovery in pre-lease activity, which accounted for 68.9% of area leased.
• Leasing of existing stock decreased 39.1% quarter-on-quarter and was 32.1% below the ten-year quarterly average.

Elevated supply pipeline but drop in quarterly completions

• Sydney recorded 43,200 sqm of completions in Q1 2025, 72.5% below the ten-year average and the lowest level recorded since Q1 2021, as several anticipated completions were delayed to next quarter.
• JLL is tracking 952,000 sqm of supply currently under construction, of which 39.5% is pre-committed.

Yields compression cycle begins in most Sydney industrial precincts

• Most precincts recorded rent uplifts in Q1 2025; however, this primarily stemmed from basket adjustments and enhanced stock quality, rather than demand-driven factors.
• Following elevated activity in Q4 2024, investment volumes moderated to AUD 688.2 million, 2.2% below the ten-year quarterly average.

Outlook: Yield compression may continue

• We anticipate that elevated speculative supply and sublease availabilities will exceed demand, with vacancy expected to increase further, constraining effective rent growth.
• Strong underbidder activity in the investment market suggests that investor demand remains strong and may support further yield compression over 2025.