Infrastructure and servicing constraints are limiting the amount of industrial land available for new warehouses, logistics facilities and manufacturing operations across NSW, despite significant quantities of land carrying industrial zoning.
New research commissioned by the Property Council of Australia and prepared by Solve Property Group examines industrial land supply, vacancy and demand across Greater Sydney, the Hunter and Central Coast, and Illawarra-Shoalhaven regions.
The Ready to Grow: Unlocking Industrial Growth in NSW report assessed 424 industrial precincts and identified approximately 4,228 hectares of undeveloped industrial land across Greater Sydney.
That figure sits substantially below the 7,166 hectares recorded in the NSW Government’s Employment Lands Development Monitor.
Across the broader study area, researchers identified approximately 8,015 hectares of undeveloped industrial land. However, the report warns that zoning alone does not determine whether businesses can actually develop and use that land.
Infrastructure determines usable supply
Industrial developments require access to electricity, water, sewerage, stormwater infrastructure, suitable roads and freight connections before businesses can turn zoned land into operational facilities.
The report argues that NSW should therefore measure industrial land supply according to its development readiness rather than simply the amount of land carrying an industrial zoning.
Property Council NSW Executive Director Katie Stevenson said industrial land supports infrastructure and services extending well beyond the property sector.
“Industrial land underpins the warehouses, freight hubs, building suppliers, data centres, logistics businesses and urban services that keep goods moving and support a growing NSW,” Stevenson said.
“If NSW cannot deliver enough serviced industrial land in the right locations to support this growth, the cost is ultimately felt by businesses, consumers and home buyers.”
The Property Council has called for greater coordination between planning, utility and transport agencies, along with clearer infrastructure delivery timelines.
Vacancy does not tell the full story
Industrial vacancy has increased from the record-low levels recorded in 2023 to approximately 4% to 5% across several NSW markets, but the report says the increase does not necessarily indicate sufficient suitable warehouse capacity.
Available properties can be concentrated in particular locations or consist of older facilities that no longer meet the requirements of modern logistics and manufacturing operations.
Older warehouses may lack sufficient internal clearances, floor strength, loading capacity, heavy-vehicle access, electricity supply or infrastructure required to support automation.
As a result, businesses seeking new logistics space can face constraints even when headline vacancy figures suggest properties are available.
Western Sydney to drive industrial growth
Western Sydney is expected to remain NSW’s primary industrial growth area, supported by Western Sydney International Airport, the Aerotropolis and surrounding logistics precincts.
However, delivering the infrastructure needed to service industrial land will play an important role in determining how quickly that growth can occur.
The Property Council has previously argued that the potential of Western Sydney Airport depends on coordinating roads, rail, utilities and approvals with the region’s growing freight task.
The NSW Government has also recognised the challenge through its Industrial Lands Action Plan, which aims to improve the planning, protection and delivery of industrial land across the state.
The government has acknowledged that escalating land values, higher rents and shortages of immediately developable industrial land in some locations can increase business costs and affect freight and logistics investment.
Industrial employment set to increase
Industrial precincts across the areas covered by the research supported an estimated 562,011 jobs in 2021, with employment projected to reach 798,809 by 2036.
The Outer South West is expected to record the strongest growth, with industrial employment forecast to increase by 79.1% over the period.
Transport, postal and warehousing is projected to become the largest employment sector within NSW industrial precincts by 2036, accounting for 14.6% of employment.
The projections increase the importance of ensuring industrial areas can accommodate new freight, logistics and warehouse operations as demand grows.
Data centres add pressure to infrastructure
Data centres are also emerging as a major source of demand for industrial land and supporting infrastructure.
Unlike conventional warehouses, data centres can require substantial electricity and water capacity, increasing infrastructure competition that also supports logistics, manufacturing and other industrial users.
The report argues that governments and infrastructure providers need to consider this demand alongside the requirements of freight, logistics, manufacturing and construction-related businesses when planning future industrial precincts.
The issue has become particularly important as population growth, electrification and energy-intensive industries place additional pressure on NSW’s electricity network.
Turning zoned land into logistics capacity
The NSW Government has finalised its Statewide Policy for Industrial Lands, establishing a framework to identify and manage industrial land according to its state, regional or local significance.
For the logistics sector, however, the report suggests the next challenge lies in converting planning designations into operational capacity.
Servicing land with utilities, providing suitable freight connections and giving businesses greater certainty around infrastructure delivery can determine whether a site progresses from an undeveloped parcel to a functioning warehouse, distribution centre or manufacturing facility.
The Property Council is calling for accelerated investment in enabling infrastructure and improved reporting on development-ready industrial land, including information on servicing constraints, freight accessibility and infrastructure delivery timelines.
As demand for logistics facilities, manufacturing capacity and data infrastructure grows, NSW’s industrial land challenge will increasingly depend not on how much land appears on planning maps, but on how much can realistically support businesses and supply chains.
Yvette is a Content Producer at Akolade, producing stories for Supply Chain Channel, an Australian learning ecosystem created to address the need for information, networking, case studies, and empowerment for everyone in the supply chain sector.
