Data centre boom to double Australian industrial rents

Data centres drive up industrial land values

Modelling by JLL researchers based on land acquisition premiums paid by data centre developers shows economic rents for a 20,000 square metre warehouse could double in some markets by 2028.

An analysis of sales between 2012 and 2026 found data centre developers paid a premium of 20.4 per cent to 63.3 per cent for industrially zoned land in traditional outer suburban areas, measured against average land values. 

These sales lumped pressures on traditional industrial developers. In the Sydney market, economic rents are now between 30 and 43 per cent above current average prime net face rents and in Melbourne’s west, economic rents could exceed market rates by 130 per cent.

Regional Australia emerges as the next frontier

Until recently, the demand for developable land and warehousing has been concentrated on the fringes of suburbia in Sydney and Melbourne. However, regional locations offer greater land availability and more abundant renewable energy resources.

This month, AI giant Anthropic signed its first deal in Australia to use a $32 billion data centre hub on Queensland’s Western Downs, 200 kilometres west of Brisbane.

It could pave the way for data centre development in Australia.

“That deal signifies what people have been thinking for a long time, that there is no future without regional,” says Matt Lee, executive director and co-head of Australian data centres at JLL.

“It really highlights clearly that we have a finite amount of land and power left in metropolitan locations. Now there is proof that with Anthropic being considered as an end customer, that they have absolute confidence that a regional player like that works for what they want to do.”

Investor interest “unimaginable”

Australia’s pipeline for data centre development is fit to burst with up to 16.2 gigawatts under construction or planned from 2026 onwards. AirTrunk leads the way with 5572 megawatts underway, followed by NextDC at 1592 megawatts and CCT Data Centres at 1324 megawatts. 

It’s no surprise that investor interest is massive. JLL research shows real estate investment trusts such as Charter Hall, DigiCo, Goodman and Centura have either completed or have ongoing operational data centre portfolios, while Stockland and Lendlease are actively developing or planning data centre infrastructure.

“The scale, the demand, the interest is immense,” says Lee. 

“The amount of interest is unimaginable. It’s huge.”

Data centre activity is concentrated in Sydney, where 71.1 per cent of future development is planned, and Melbourne, which accounts for 19.6 per cent of the supply pipeline.

With industrial land already scarce in both cities, the impact on land values has been huge. JLL data found that in the 12 months to June 2026, average land values for two- to five-hectare lots in Melbourne’s west grew by 16.5 per cent and by 9.6 per cent in Sydney’s outer central west. 

JLL researchers predict prices will continue to rise as more data centres pop up around Australia. 

“As the data centre sector grows in Australia, the competitive tension for land between traditional industrial developers and data centre operators is likely to increase,” the report states.