Melbourne’s Industrial Market: Growth Drivers Remain Strong as Supply Tightens

Melbourne’s industrial occupiers have benefitted from ongoing population growth, with Victoria continually recording the highest number of new additions to the population by state. In the year to September 2025, Victoria added 122,000 people to the population. This momentum is set to continue, with Melbourne forecast to overtake Sydney as Australia’s most populous city by the early 2030s. This is largely being driven by strong net overseas migration, in addition to a leading international student population, contributing to large demand for goods and services. By 2050, Melbourne’s population is expected to reach ~8 million people.

Victoria’s gross state product (GSP) grew by 1.1% in 2024-25, the strongest increase of the non-mining states. This is forecast to grow to 2.25% in 2025-26 and 2.5% in 2026-7 primarily driven by household consumption following real wages growth and increases in real household disposable incomes.

Melbourne holds its place as one of the most connected hubs nationally, with Victoria moving more containerised freight per person than any other state. This is largely facilitated by Australia’s largest container port, with volumes forecast to more than double by 2050. Ongoing transport infrastructure investment projects total A$97 billion, leading all other states.

The recently opened West Gate Tunnel and the ongoing North East Link (NEL) project will improve travel times across catchments and improve access to the Port of Melbourne and end consumers. The $28 million Commonwealth and Victorian government investment into the Dandenong South Inland Port, a 24-hour fully automated container terminal with a capacity of 560,000 TEU per annum will further cement Melbourne as a leading industrial market.

Melbourne remains one of the most competitively priced industrial markets nationally, trading 10-45% below Sydney and Brisbane. This relative affordability positions Melbourne well in its continued attractiveness for occupier expansions. This is reflected in Melbourne’s demand figures, with 1.2 million sqm of space leased through 2025, the highest volumes of the major industrial markets. Melbourne West has led this demand with 60% of market activity, favoured by transport and logistics and retail trade sectors. 

Looking forward, supply is expected to fall significantly across Melbourne with a 35% reduction of supply in 2026 compared to peak levels in 2024. Melbourne’s West is expected to see the lowest levels of speculative supply since 2018. Across the market supply is increasingly moving into outer suburbs, largely due to restrictions on land availability in more traditional submarkets.