Institutional demand for the logistics sector is a global phenomenon that has been turbo-charged by a worldwide pandemic and its acceleration of some pre-existing trends. Australia is no exception, as global capital seeks access to what has historically been a tightly held sector until more recently, with many new entrants making a splash. JLL estimated A$45 billion (US$33 billion) in capital is looking for a home in the Australian industrial and logistics market in 2021. This was reinforced by the ANREV/INREV/PREA Investment Intentions Survey 2021, which indicated Sydney and Melbourne logistics is the most sought-after asset class across the Asia Pacific region.

But the vast majority of this capital is focused on the big, shiny logistics sheds, often benefitting from long lease terms (to varying covenant strengths), on the outer fringes of Australia’s largest cites. Subsequently, cap rates have seen tremendous compression during the past 12 months, with the recent