Manufacturing became the largest occupier group in Australia’s industrial and logistics property market during the second quarter of 2026, accounting for 37 per cent of national take-up, as the sector continued to record solid leasing activity and the national vacancy rate declined to 4.8 per cent, according to new research from JLL.
The report found the national vacancy rate eased from 5.0 per cent in the previous quarter to 4.8 per cent, reflecting continued occupier demand alongside slowing supply. Australia’s Eastern Seaboard recorded 1.2 million square metres of net absorption year-to-date, with Brisbane delivering the strongest performance.
Annabel McFarlane, JLL’s Head of Strategic Research, said leasing activity during the quarter was influenced by the expiry of many five-year leases signed in 2021.
“Total gross take-up in Q2 2026 is impacted by the five-year lease terms that many occupiers committed to in 2021 are expiring,” McFarlane said.
“The market conditions are fundamentally different. In mid-2021, with national vacancy at 1-2%, many occupiers adapted and compromised to spaces available at the time; a more balanced market in Q2 2026 allows an opportunity to reassess operational needs.”
Brisbane led the country with net absorption of 308,200 sqm during the quarter and 549,400 sqm year-to-date, while its vacancy rate fell from 5.3 per cent to 4.5 per cent.
Nathan Bingham, Head of Logistics & Industrial ANZ at JLL, said Brisbane’s market continued to benefit from favourable development conditions and population growth.
“Brisbane’s industrial and logistics market is benefiting from the significantly easier development timelines and the ongoing population growth. The initial impacts of increased industrial requirements relating to the Olympics are now starting to flow through,” Bingham said.
Melbourne recorded its third consecutive quarter of tenant transaction activity at more than double the historical average, with tenant moves exceeding 5,000 sqm totalling 443,100 sqm. Vacancy tightened from 5.2 per cent to 4.9 per cent.
“Though take-up numbers have recorded positive results, occupiers are selective, and demand is very mixed across precincts in Melbourne. There is a relative lack of supply over the very near term in larger size cohorts which is creating urgency in some occupier groups,” Bingham said.
In Sydney, vacancy stabilised during the quarter, although recently completed multi-level developments contributed to higher vacancy within those precincts.
Richard Phillips, Head of Supply Chain ANZ at JLL, said almost all newly completed super prime industrial stock, apart from multi-level developments, had been leased.
“Sydney recorded a stabilisation in vacancy, however new multi-level schemes have reached practical completion in Q2, and these have impacted vacancy growth within these precincts. Vacancy depth has pivoted to prime stock, as almost all new super prime stock other than multi levels have been taken,” Phillips said.
JLL also reported positive market conditions in Adelaide and Perth. Adelaide recorded net absorption of 160,700 sqm during the quarter, with vacancy tightening from 4.5 per cent to 3.8 per cent, while Perth recorded 44,600 sqm of net absorption, with vacancy increasing slightly from 2.0 per cent to 2.2 per cent.
Phillips said businesses supporting data centre construction were also emerging as a notable source of demand in Sydney.
“These groups are providing ancillary services to the NSW and VIC data centre construction boom and in Sydney, have accounted for 14.5% of gross take-up this quarter,” he said.
The report found sublease vacancy remained steady at 0.7 per cent, while direct vacancy declined from 4.3 per cent to 4.1 per cent. JLL said developers continued to limit speculative projects larger than 25,000 sqm, with strong pre-commitment levels supporting the long-term supply pipeline.
“The supply pipeline dynamics across Australian industrial markets highlight the confidence developers and occupiers have in long-term demand fundamentals, particularly in Brisbane where pre-commitment levels are exceptional. However, markets like Sydney and Melbourne are showing more cautious development activity, which may support continued compression of vacancy rates over the medium term,” Bingham said.
