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FITZROYS 2026 OUTLOOK – Industrial

Posted on 12th February 2026

A Balanced Market

Melbourne’s industrial market is expected to remain balanced throughout 2026, as ongoing demand from core occupier groups underpin investor confidence and the flight to quality intensifies.

Fitzroys Director - Agency, Marco Sandrin said e-commerce and logistics, land scarcity, infrastructure connectivity and population growth are the core fundamentals driving the industrial market in the new year.

Vacancy rates will ease amid moderated supply delivery (both in Melbourne and across the East Coast), creating conditions for segmented rental growth. Occupier momentum will continue on its path of renewal while remaining selective, with a preference for quality and location-driven assets.

Core occupiers to underpin investor confidence

Core occupier groups – transport and warehousing, e-commerce, manufacturing and retail logistics – will remain central to occupier demand and underpinning investment confidence.

“Assets with strong logistics characteristics and proximity to infrastructure will outperform. Limited developable land supply will continue to support long-term investment,” Sandrin said.

2026 will be characterised by highly segmented buyer behaviour:

  • Institutional buyers will chase certainty and scale
  • Mid-market capital is targeting growth and repositioning
  • Owner-occupiers are seeking control and long-term savings
  • Developers will stay disciplined, but strategically active
  • Opportunistic buyers will exploit pricing gaps

Sandrin said interest rates in 2026 will act as a moderating influence on Melbourne’s industrial market, shaping the pace of sales, yield expectations and capital deployment strategies.

“Previous cycles saw rate moves to prove quite abrupt and disruptive. The industrial sector’s strong fundamentals, structural demand drivers and low supply environment are expected to dampen any negative effects of interest rises in 2026, and support relative performance throughout the year.”

Sub-$10 million

The sub-$10 million range has seen steady turnover, including for strata lots and smaller freehold warehouses. There has been strong participation in this market segment by owner-occupiers and self-managed super fund buyers.

“We expect continued activity in this sector, driven by expansion and investor diversification,” Sandrin said.

Middle markets

Syndicated and private funds looking to scale portfolios and capture rental reversion have been driving activity in the $10 million to $50 million range.

A considerable number of middle market buyers have been targeting assets with rental upside or redevelopment potential – particularly on infill lots with long-term leasing prospects.

Sandrin said, “Sales volumes should remain healthy in 2026, with deals driven by strategic repositioning plans and occupier expansion.”

Institutional

Strong investor interest has translated into prime industrial yields remaining competitive, sitting in the mid-5% range.

“Institutional buyers are selective, pricing in future cash-flow stability and tenant strength.

“Capital is focused on assets with prime logistics tenants, long-WALE assets, infill sites, and strategically-located assets.”

Flight to quality in leasing market intensifies

Melbourne’s industrial leasing market in 2026 will be determined by quality, location and costs, as the flight to quality intensifies.

“Occupiers will increasingly prioritise operational efficiency and certainty over pure rent minimisation. They will place greater weight on total occupancy cost, not just face rent,” said Brent Glassford, Fitzroys Director – Agency.

The leasing market is moving from an exceptionally tight phase into a more balanced environment, following elevated speculative completions in 2024 and 2025. After a period of downwards pressure, vacancy rates are expected to ease in 2026. Vacancy has already lifted in parts of the North and Outer West, giving tenants more choice than they’ve had in several years.

Rental growth will be segmented as occupier momentum is selectively renewed, particularly for high-quality and strategically located assets. Quality assets continue to lease faster and hold rentals, even in locations which have seen vacancy rises.

In 2026, the biggest beneficiaries of Melbourne’s and Victoria’s industrial economy drivers - population growth, freight and logistics intensity, non-discretionary consumption, infrastructure spending, and land and supply constraints - will be most active in leasing industrial space:

  • Transport & logistics / 3PL
    • Mid to large-format logistics
    • 10,000 to 40,000-plus sqm
    • High-clearance warehousing
    • Victoria-wide
  • Food, cold storage & FMCG
    • Specialised facilities
    • Cold storage and temperature-controlled warehousing
    • High power capacity
    • Victoria-wide
  • Essential and advanced manufacturing
    • 2,000 to 10,000sqm
    • Functional layouts
    • Power and flexibility
    • Established industrial precincts - Inner West, North and South-East
  • Infrastructure-linked trade operators
    • Smaller warehouses with yard
    • 5,000 to 10,000sqm
    • Hardstand, outdoor storage, easy truck access
    • Functional, not necessarily high-spec buildings
    • Inner West and North - proximity to job sites is critical
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