‘Thematics are still strong’: Will warehouse rents hold up amid tariff turbulence?

Aussie warehouses are poised for further rental growth this year despite the Trump tariffs and the resulting economic uncertainty that has swept across the globe, experts say.

Experts from leading warehouse landlord Charter Hall and broker CBRE predict that premium warehouse rents will grow somewhere between 3-5% in Australia in 2025.

Premium warehouse rents increased by 5% year-on-year (YOY) in the first quarter, with the strongest growth recorded in Sydney and Perth, according to CBRE.

Commercial property investors prize rental growth, as it boosts income returns and asset valuations, with consistent rent increases indicating favourable supply and demand conditions.

Industrial rental growth has been slowing in recent years compared to the heady pandemic period, when rents surged by more than 20% YOY at its height.

Prime warehouse rents grew about 5% year-on-year nationally in the first quarter of 2025. Picture: Getty

But the Trump administration’s recent tariff blitz has upended trade and shaken economic outlooks globally – two factors that can influence industrial property markets.

Charter Hall industrial and logistics chief executive Richard Stacker told realcommercial.com.au that the tariffs were unlikely to have a direct impact on Australian warehouses.

“There aren’t many businesses here who are exporting a lot of goods to the US, so I don’t think there is going to be much [warehouse] demand fall away because we’re going to be exporting less to the US,” he said.

But he noted that the tariffs may have some indirect consequences on industrial demand in Australia, as uncertainty roils business and economic outlooks.

“Over the next 12 months, I think we’re in for a period of some volatility and maybe slower decision making,” he said.

“But when I look at the medium term for industrial, the thematics are still strong.”

Charter Hall industrial and logistics chief executive Richard Stacker said the industrial real estate thematics were still strong. Picture: supplied

The thematics included the country’s population growth, increasing popularity of online shopping, and rising warehouse automation that required new, bespoke industrial space.

“Over the next 12 months… we forecast with rents probably being more normalised now, depending on the market, that it might be somewhere between 3.5% to 5% in terms of [advertised] rental growth,” he said.

“I can see that almost continuing into the medium term as well,” he said.

On the supply side, about 2.3 million square metres (sqm) of new warehouse space is set to be built in the Australian market in 2025 – 18% above the long-run average.

It comes after even higher levels of new industrial space hit the Australian market in the past two years.

CBRE head of industrial and logistics research Australia and director of NSW research, Sass Jalili, said industrial vacancy levels had been increasing during the past 18 months, which had caused the slowdown in rental growth.

About 2.3 million square metres of new warehouse space is set to be built in Australia in 2025. Picture: Getty

“Despite rental growth slowing, supply remains an issue, as reflected in a globally low vacancy rate averaging 2.5% cent nationally,” Ms Jalili said.

Tenants took up about 2.7 million sqm of warehouse space nationally over the 12 months to the first quarter of this year, with the broker estimating take-up levels between 5-10% higher YOY for 2025.

CBRE expects national vacancy levels to stay below 4% this year, supporting the case for advertised rent growth of about 4% during 2025.

That said, Ms Jalili noted that incentives had been increasing as new developments were added to the market, limiting effective rental growth to as little as 1.5-2% this year.

In light of the supply and demand picture, she said industrial investment would be targeted, with the best properties expected to outperform secondary assets.

Additionally, markets with supply shortages such as Melbourne’s southeast and Sydney’s central west were tipped to perform well.

CBRE recorded about $1 billion in industrial property transactions during the first quarter, and estimates about $7 billion worth of deals for 2025.

Charter Hall is one of Australia’s biggest warehouse landlords, operating more than 300 industrial and logistics properties worth more than $25 billion.