Sydney’s industrial market primed for growth in H2

Sydney’s industrial property market is expected to pick up in activity over the second half of the year despite seeing yield compression for the first time since 2021.

According to Knight Frank’s Sydney Industrial State of the Market Q2 2025 report, both prime and secondary yields had tightened by 7.5 basis points for the first time in four years.

This comes despite bustling transaction activity in the second quarter amounting to $867 million, including Centuria and BGO’s joint acquisition of three warehouses in Western Sydney totalling 45,000 square metres of industrial space for $201 million.

However, Q2 did not compete with Q1’s $936 million in transactions.

“Investor momentum is likely to pick up further over the second half of the year,” Knight Frank Associate Director for Research and Consulting, Marco Mascitelli, said.

“We have passed the cyclical bottom of the market, with investors increasingly returning to the market as confidence returns, and further expected interest rate reductions will spur activity on.”

“The outlook for Sydney’s industrial investment market is very positive, with the RBA expected to cut rates through 2025, improving liquidity and investor appetite,” Knight Frank, Head of Industrial Investments, Angus Klem said.

“Investors, therefore, anticipate yield compression and upside from asset revaluation. We anticipate a positive shift in transactional volume.”