The 2026 West Industrial Market Report | Fairmont Property Group

If you own an industrial property in Melbourne's west, the headline you keep hearing is that rents are up. That is true. What most owners are not told is the other half of the picture: vacancy has climbed to its highest level in a decade, and landlords are handing back a large share of the lease in incentives to get deals across the line.

The result is a market that looks strong on the sticker and softer underneath. Reading it correctly is the difference between a confident decision and an expensive one.

The five numbers that matter

~5%

West precinct vacancy, near a decade high. The ten year average is 2.6%.

~26%

Prime incentives in the west, the highest of any Melbourne precinct.

~$140/sqm

Prime net face rent in the west, up about 6% over the year.

210ksqm

Space leased in the west in the quarter, more than half of all Melbourne.

-37%

Forecast fall in new industrial supply in 2026 versus 2025.

2.6%

The ten year average vacancy, for context on how far the market has moved.

Face rents are rising while incentives sit above 20%. In plain terms, the advertised rent looks healthy, but a quarter of the lease term is being given back to win the tenant. The effective rent is softer than the number on the board.

What it means if you own

Time on market is now the risk, not price. With vacancy near a decade high, an empty building carries rent, outgoings and land tax while a tenant weighs up more options than they had a year ago. The owners getting clean results are the ones presenting well, pricing to the real market rather than the sticker, and moving early rather than testing a high number for months.

The good news underneath the vacancy figure: leasing activity is running above long term norms, and the west recorded the strongest take up of any precinct in Melbourne. Demand has not gone away. Supply has simply beaten it for now, and with new supply forecast to fall about 37% in 2026, that pressure is expected to ease into 2027.

What it means if you are buying

This is one of the more favourable windows for buyers in years, particularly owner occupiers and buyers using an SMSF. Sale volumes have been subdued and buyers hold more leverage than they did through the boom. If you have been waiting to buy your own premises rather than keep leasing, the current market rewards being ready to move on the right asset.

Want to know what your specific property is worth today?

The figures above are the market. Your building is not the market. We will give you a straight read on your address, with no lock-in and no obligation.

Get a free appraisal

Sources

Knight Frank, Melbourne Industrial State of the Market, Q1 2026: west precinct vacancy 5.2%, prime incentives 26.1%, prime net face rent $140/sqm (up 6.1% year on year), take up 210,018 sqm. Melbourne wide vacancy 4.5% against a ten year average of 2.6%. View the report
Knight Frank, Q2 2026 update (Melbourne wide): vacancy near 5% at a decade high, prime incentives about 21.2%, prime net face rent about $155/sqm (up 5.6% year on year), 2026 new supply forecast about 530,000 sqm, down 37% on 2025.

This report is general market information only. It is not financial, investment, tax or legal advice, and it is not a valuation or appraisal of any specific property. Figures are sourced from Knight Frank Research as at the periods noted and may change. For advice on your own circumstances, speak with your accountant, financial adviser or a licensed valuer. Fairmont Property Group is a property agency, not a licensed financial adviser.