Centuria – The property sector that’s been quietly outperforming

The property strategies of SMSF investors often centre around the familiar world of residential homes and apartments—with suburbs, auctions, rental yields and capital growth often dominating conversations. While residential property has traditionally claimed the limelight, the industrial sector has been quietly outperforming the broader Australian commercial property market. This makes industrial property worthy of attention, especially for SMSF investors seeking to diversify their portfolios beyond residential property.

Industrial property doesn’t boast the street appeal of a renovated terrace in Sydney’s Paddington or the aspirational glow of a new build in Brisbane’s outer ring. Instead, it sits behind the scenes, powering the economy through logistics, manufacturing and infrastructure. And now, it has stepped into the limelight.

Industrial property has emerged as one of the standout performers within Australia’s commercial property market since 2020. While the other commercial property sectors have faced headwinds in recent years, industrial has demonstrated its resilience and delivered robust rental growth. According to JLL Research published in the first quarter of 2025, industrial rents in Adelaide increased by 47% between 2021 and 2024.

Several factors have underpinned industrial’s strong performance. As remote work challenged the dominance of office property and e-commerce reshaped retail, industrial property became indispensable for the movement, storage and distribution of goods across the country. Strategic locations close to major transport corridors have allowed industrial assets to benefit from Australia’s expanding logistics and distribution networks. The sector’s traditionally low vacancy rates have also tightened further in recent years, reflecting intense competition for limited stock.

The industrial sector is anticipated to be one of the best performing sectors of Australia’s commercial property market in the coming years, underpinned by several key growth drivers.

Growth drivers for industrial real estate

1. 1. E-commerce growth
      The rapid adoption of e-commerce has been particularly transformative for industrial property. As online shopping becomes ever more ingrained in daily life, retailers and logistics providers have been compelled to expand their storage and distribution capabilities.Every $1 billion in additional e-commerce sales requires an additional 70,000 sqm of logistics space^[1], placing warehouses and fulfilment centres at the heart of the industrial property demand. This shift has positioned industrial property as the backbone of Australia’s modern retail economy and elevated its status among savvy investors.
   
   
   2. Onshoring
   The trend of onshoring—bringing production and assembly processes back to Australia from overseas—has added a new layer of momentum to the industrial market. As businesses seek greater supply chain resilience and efficiency, onshoring is driving heightened demand for domestic industrial space, further strengthening the sector’s appeal.
   
   
   3. Demographic trends
      Demographic trends are playing a pivotal role in shaping Australia’s industrial real estate market. Looking ahead, the market will need to grow 20% by 2030^[2] to keep pace with the projected surge in population. With more than 85% of Australians now living in urban areas, there is a heightened emphasis on efficient last mile delivery and robust logistics infrastructure, underscoring the significance of these demographic shifts for the industrial sector’s anticipated continued expansion.
   
   
   4. Supply/demand imbalance
   The ongoing supply imbalance in Australia’s industrial real estate sector is being driven by a convergence of rising construction costs, capital constraints, and persistent planning delays—all of which have limited the pace at which new logistics facilities can come online.
   
   From 2025 to 2027, annual completions of new logistics space are expected to average 1.9 million square metres, falling short of the estimated structural demand of 2.1 million square metres per year shaped by strong e-commerce momentum and population growth.^[2] With vacancy rates already at a tight 2.8%^[2], this supply shortage is projected to persist over the medium term, underpinning potential for continued rental growth and strengthening the investment appeal of well-located industrial assets.
   
   Together, these trends reinforce the sector’s potential and create an environment where industrial real estate stands out as a dynamic, future-focused opportunity for SMSF investors seeking robust returns and long-term value.
   
   
   Port Adelaide Distribution Centre – an attractive entry point
   
   SMSF investors willing to look beyond the familiar rhythms of the residential property market can gain exposure to the industrial property market through the Centuria Port Adelaide Industrial Fund (‘Fund’).
   
   This new unlisted property fund invests in one of South Australia’s landmark industrial estates–the Port Adelaide Distribution Centre (PADC).
   
   With a forecast distribution yield of 7.50% p.a. in FY26 (annualised), growing to 8.50% p.a. in FY27^[3], the Fund aims to provide attractive, tax-deferred income over its initial 5-year term. The closed-end fund is backed by strong market fundamentals and is positioned for growth thanks to PADC’s scale, tenant mix and location in a precinct that is high in demand and in close proximity to significant infrastructure.
   
   The Fund is managed by Centuria, one of Australia’s leading, ASX-listed property fund managers with over $20 billion in assets under management as at 30 June 2025. They have extensive expertise in the industrial sector, with a large national portfolio and a deep tenant network in South Australia.
   
   The Fund will only remain open for a limited time and has a minimum investment of $50,000. For investors considering the commercial property market, PADC represents a compelling opportunity.
   
   Visit https://www.centuria.com.au/cpaif to learn more and request a copy of the Product Disclosure Statement.
   
   
   
   
   [1] CBRE Research, Q2 2025
   [2] Colliers Research – The Essential Core of I&L Demand
   [3] Forecast distributions are pre-tax, is predictive in nature and is subject to assumptions, risks and circumstances (both known and unknown) outside of the control of the Fund. The actual returns may differ from the forecast return. Distributions will be paid if declared by the responsible entity and will be subject to the terms, assumptions and risks set out in the PDS.