Western Sydney industrial development pipeline shrinks 39%

Western Sydney’s industrial development pipeline has contracted by 39 per cent to 6.3 million square metres. According to the RWC Western Sydney October 2026 industrial market report, rising construction costs, financing pressures, and a decrease in development applications are the primary drivers of this slowdown.

Currently, only 719,000 square metres of industrial space is under construction across the region’s four major precincts. The Outer West pipeline has declined by 22 per cent, while the South West has seen a 28 per cent reduction.

Despite the contraction, demand for logistics facilities remains high, particularly near the Western Sydney International Airport. However, competition from data centre developments, which account for approximately 280,000 square metres of the pipeline, is placing additional pressure on available sites. The report warns that the reduced pipeline may constrain the supply of modern industrial facilities in 2027 and 2028.