AI Data Centre Boom Could Double Australian Warehouse Rents by 2028, JLL Finds

HouGarden Australia, 24 September — The finding comes as Australia cements its position as the third-largest destination for data centre development globally, with a construction and planning pipeline that JLL says could reach a combined capacity of up to 16.2 gigawatts from 2026. That figure represents projects currently under construction or in planning — not yet completed capacity.

JLL researchers modelled the effect of the land-price premiums that data centre developers have been paying over conventional industrial buyers. Analysis of transactions recorded between 2012 and 2026 shows that in traditional outer-urban locations, data centre developers paid between 20.4 per cent and 63.3 per cent above average land values when acquiring industrially zoned sites.

Those elevated purchase prices are flowing through to the economics of conventional industrial development. JLL's modelling shows that in Sydney, the economic rent — the net face rent a developer needs to charge to break even on a new project — is already 30 to 43 per cent above the current average prime net face rent in the market. In Melbourne's west, the gap is even wider: economic rent could exceed the prevailing market rent by as much as 130 per cent. These figures reflect the cost pressure on developers, not a rise in rents already charged to tenants.

Sydney and Melbourne's urban fringes have historically absorbed the bulk of demand for developable industrial land and warehouse space. JLL's research points to regional areas as the next frontier, offering larger land parcels and better access to renewable energy resources.

This month, US artificial intelligence company Anthropic signed Australia's first agreement of its kind, committing to use a A$32 billion data centre hub located in Queensland's Western Downs region, roughly 200 kilometres west of Brisbane. JLL describes the deal as potentially transformative for data centre development patterns across the country.

Matt Lee, Executive Director and Co-Head of Data Centres at JLL Australia, said the agreement confirmed a long-held view in the industry. 'There is no future without regional,' he said. 'This clearly demonstrates that there is a limited amount of land and power remaining in metropolitan areas. Now that Anthropic is seen as an end-user, it also validates that they have full confidence that a regional project can meet their needs.'

Australia's data centre development pipeline is already substantial. From 2026, projects under construction or in planning have a combined capacity of up to 16.2 gigawatts. AirTrunk leads the field with 5,572 megawatts of capacity under construction, followed by NextDC at 1,592 megawatts and CCT Data Centres at 1,324 megawatts.

Lee described investor interest in the sector as extraordinary in scale. 'The size, the demand, the attention is massive — the attention is unimaginable, it is very, very large,' he said.

JLL's research identifies several real estate investment trusts that have already assembled or are operating data centre portfolios, including Charter Hall, DigiCo, Goodman and Centura. Stockland and Lendlease are listed as actively developing or planning data centre infrastructure.

Activity remains heavily concentrated in Sydney, which accounts for 71.1 per cent of planned future development. Melbourne represents 19.6 per cent of the supply pipeline. Both cities face acute shortages of industrial land, and JLL data shows the pressure on values is already measurable. In the 12 months to June 2026 — a forecast period — average land values for two-to-five-hectare sites in Melbourne's west are projected to rise 16.5 per cent, while outer south-western Sydney is forecast to see a 9.6 per cent increase over the same period.

JLL researchers expect land values to keep climbing as more data centre projects are announced across the country. Their report states: 'As the Australian data centre industry continues to grow, competition for land between traditional industrial developers and data centre operators is likely to intensify.' It adds: 'As a result, land values for large-format sites are expected to increase, placing further pressure on the viability of future developments.'

For industrial property investors on both sides of the Tasman, Australia's data centre boom offers a live case study in how a single sector can reshape land economics across entire metropolitan markets.