By Shane Robb | 6 Mar 2023

We conducted a study into industrial land supply in Greater Melbourne at the instruction of the Property Council of Australia. Our findings show that there is only 4 years of zoned industrial supply remaining.

We aimed to address the key issues including the scarcity of land for developers in the region, its impacts on the economy and future recommendations.

Our report provides evidence-based research into land supply assessment, addressing the changing market conditions and ensuring delivery of a feasible and suitable outcome.  

Between 2015 and 2021, the proportion of e-commerce to all retail trade increased from 5.6% to 12.7%. This has translated into exponential growth in demand for industrial floorspace.

To understand the level of supply and associated consumption in the industrial market, the Victorian Government, through the Department of Environment, Land, Water and Planning (DELWP) undertakes an annual assessment of industrial land supply in the region. The most recent Urban Development Program report for 2021 quoted 7,856ha of vacant and underutilised land, amounting to 26.1 years of supply, based on an average consumption rate of 301ha. 

In significant contrast, our report found that there is only 4 years of zoned industrial supply remaining in Metropolitan Melbourne’s core industrial precincts. These results are based on our methodology of identifying regions of market activity, analysing and classifying sites within those regions on their physical attributes and engaging with the wider industry through case studies to gauge the actual quantum of active zoned supply available.

Demand for industrial land has increased significantly in the last three years due to the proliferation of e-commerce and the impact of supply chain constraints. This has resulted in unprecedented demand for space in the industry, mainly driven by logistics and the retail trade businesses.

Shane Robb

The reduction in land supply is also a consequence of a recent uptick in construction in the various industrial corridors of Melbourne, with 2.2 million sq.m of new developments added between 2020 and 2022. This development has pushed recent industrial activity to the edge of the Urban Growth Boundary in the Western and South-Eastern corridors. This has been driven largely by a need for larger floorplates to accommodate the emerging technologies in the market, including last mile logistics and automation. 


As a flow on impact, the industrial market has witnessed an upward shift in rents and land values while incentives continue to trend downwards. This has also resulted in a repricing of rents and land values between Melbourne and Sydney, with rents in some regions of Melbourne increasing by 8% p.a. and land values by 35% p.a.  This is higher than growth witnessed in the Sydney industrial market and consequently, the price gap for land acquisition and warehouse development between the two markets has reduced.



Until recently both Melbourne and Sydney markets were witnessing a scarcity in land supply to a degree, Sydney more than Melbourne. The size of warehouse development was therefore constrained with tenant demand contained within the respective markets. However, with the recent zoning in excess of 4,000ha of industrial / employment land in the Aerotropolis State Environment Planning Policy (SEPP) and the wider Western Sydney market, there is now a potential risk that tenants will move to Sydney as the cost difference between these markets closes. Investments and the associated employment possibilities in turn could be lost to other regions.

If we can fulfil industry requirements, unlocking industrial land, we estimate a further 28,000 – 35,000 jobs will be generated, helping grow Victoria's economy.

Shane Robb

To avoid such a consequence, Urbis, in consultation with the wider industry, has provided some recommendations to unlock further industrial land supply in Melbourne. These include:

  • refining the UDP dataset and engaging with the wider industry to provide a more holistic view of industrial supply
  • releasing more land supply in key locations with a greater emphasis on infrastructure planning and delivery, along with a more coordinated approach to industrial planning.

Want to know more? Click on the below cover image or this link to read the full report or get in touch with our team.



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