Last-Mile Logistics and Urban Industrial: How Sydney’s Inner Zones Are Being Reimagined in 2025

While Western Sydney and the outer industrial corridors continue to absorb large-scale occupier demand, 2025 is proving that Sydney’s inner and middle-ring industrial zones are undergoing their own transformation. Driven by the need for faster fulfilment, shorter delivery windows, and access to dense population catchments, last-mile logistics has become the primary growth engine in locations once considered too mature or fragmented to support expansion. Today, suburbs like Alexandria, Marrickville, Mascot, and Auburn are seeing unprecedented interest from logistics operators, trades, small-scale manufacturers, and high-performance SMEs who value proximity over size. For developers and investors, this shift represents a high-margin opportunity: retrofitting and reactivating existing industrial stock to meet the needs of a new generation of users.

Why last-mile logistics is leading demand in 2025

In a city with over 5 million people and increasingly complex infrastructure bottlenecks, proximity has become one of the most valuable commercial advantages. Customers now expect same-day or even same-hour delivery. Medical suppliers require consistent delivery speeds to metro hospitals. Food providers need inner-city cold storage solutions that can restock restaurants and stores daily. Traditional large-format industrial assets on the fringe can’t deliver that speed—and that’s where urban logistics comes in.

Key reasons last-mile logistics is driving demand in Sydney:

• E-commerce delivery models now prioritise proximity over scale

• Dark stores, micro-fulfilment centres, and rapid replenishment hubs need dense urban access

• Traffic congestion makes outer-ring warehousing less viable for fast, multi-stop delivery

• Cold chain logistics for food, grocery, and pharmaceutical sectors require low-lag access to inner suburbs

• On-demand services, such as tech support, medical delivery, and building trades, need warehouse bases close to their service areas

Together, these needs are repositioning inner Sydney industrial real estate from basic warehousing to critical infrastructure for fast-moving businesses.

Where industrial repositioning is transforming the inner market

Some of the most active industrial repositioning is happening in key metro-adjacent suburbs where older stock is now being revived, subdivided, or repurposed.

• Alexandria and Mascot: Former print shops, mechanical warehouses, and large-format storage units are being redesigned as small-scale fulfilment centres, creative workshops, and hybrid office-industrial tenancies

• Marrickville and Sydenham: Ideal for urban makers, tradespeople, breweries, and custom manufacturers needing flexible warehouse space with branding and walk-in retail options

• Auburn and Lidcombe: Larger traditional sites now attracting national logistics and retail fulfilment operators thanks to M4 access and affordable mid-ring positioning

• Artarmon and Lane Cove: Proving popular with design and tech manufacturing firms who need close access to North Sydney, Macquarie Park, and the CBD

• Silverwater and Homebush: In high demand from 3PLs and B2B suppliers wanting central access to all metro freight routes

These areas are not only tightly held—they’re now increasingly recognised as irreplaceable logistics nodes in Sydney’s overall supply chain.

What tenants are looking for in 2025

Tenants active in inner Sydney industrial markets aren’t just looking for space—they’re looking for performance. In many cases, operational cost efficiencies are being sacrificed for delivery speed, access, and brand visibility.

Today’s urban industrial tenant wants:

• 1,000–5,000m² units with modern access, functional ceiling heights, and off-street loading

• High-clearance warehousing with power and fit-out flexibility

• Close access to transport arterials, ports, and dense residential populations

• Units that support 24/7 operations or extended hours

• Design features that accommodate branding, light retail integration, or office workspace

Retrofit-ready buildings in the right locations are leasing faster than ever, and investors willing to reposition aging stock are realising strong rental uplift and capital gain.

Investment outlook: Inner industrial is back in focus

For investors, this market offers high-demand, low-vacancy, and rising yields with relatively low barriers to entry compared to greenfield land developments. The repositioning trend is attracting a mix of capital—from private syndicates and family offices through to institutional funds looking to diversify their logistics portfolios.

Why investors are targeting inner Sydney industrial:

• Sub-1% vacancy rates across Alexandria, Marrickville, Mascot and Auburn

• Strong underlying land value combined with adaptable built form

• Sharp rental growth for refurbished product

• Shorter leasing times due to unmet tenant demand

• Limited competing supply due to tight zoning and built-out precincts

In many cases, modest refurbishments and reconfigurations are delivering rental uplift of 20–40% over older leases, with long-term upside as land values continue to appreciate.

Final outlook: Urban industrial is evolving fast

Sydney’s inner and middle-ring industrial precincts are no longer viewed as legacy stock—they are strategic, high-yielding opportunities at the core of the city’s new commercial logistics network. With e-commerce, trades, delivery, and health-based sectors continuing to expand, the demand for fast, functional, metro-adjacent industrial space will only increase. What once seemed too small, too old, or too hard to reposition is now central to how business is done in one of the most competitive urban environments in the country.

How we help bring inner industrial properties to market

We work with agents, developers, and owners to reposition, rebrand, and relaunch urban industrial assets across Sydney. Our services help create maximum value from underutilised stock and capture demand from new-generation tenants looking for fast, functional space in high-performance locations.

• Aerial and ground-level 3D renders to showcase site upgrades and future-use concepts

• Repositioning strategies and branding to target last-mile, trades, creative or cold chain operators

• Digital rollout, agent tools, and IM design to attract the right kind of enquiry

• Clear messaging that frames the asset as an operational solution, not just a lease

We help your property stand out in a competitive, time-sensitive, tenant-driven market.

Let’s talk about marketing urban industrial property in Sydney

If you’re holding industrial property in Alexandria, Marrickville, Mascot, Auburn, or similar metro-adjacent precincts, now is the time to act. We can help you reimagine and reposition your site for modern logistics, creative, trade or B2B use—and drive higher rental returns, faster leasing, and long-term value uplift.