Goodman Group (ASX: GMG) expands A$17.5bn data centre pipeline as logistics demand consolidates

Goodman Group (ASX: GMG), the largest listed property group on the Australian Securities Exchange by market capitalisation, is accelerating its global data centre strategy with a sharp reallocation of its development portfolio. In its first-quarter FY26 operational update, the industrial real estate developer confirmed that over 68 percent of its current AUD 12.4 billion work-in-progress is focused on data centres, with projections for that figure to grow to more than AUD 17.5 billion by June 2026. This major shift marks a transformation in Goodman Group’s development priorities, positioning it as a pivotal enabler of global cloud infrastructure, AI-capable facilities, and edge computing capacity across metro locations.

Although shares of Goodman Group have declined by 13.44 percent over the past 12 months, the company continues to command strong institutional attention. Analysts remain largely constructive on its strategic pivot, especially given the company’s footprint in power-constrained metro zones in Tokyo, Paris, Frankfurt, Sydney, and Los Angeles. As demand from hyperscale tenants continues to intensify, Goodman Group is building a defensible moat around logistics-real-estate-as-a-service in the digital infrastructure age.

How is Goodman Group rebalancing its development pipeline toward hyperscale-ready data centres?

As of 30 September 2025, Goodman Group had AUD 12.4 billion in active development projects, a figure expected to cross AUD 17.5 billion by the end of FY26. The data centre portion of this workbook now represents 68 percent of total activity. The company plans to activate 500 megawatts of new data centre capacity by June 2026, as the initial phase of a global 1.8-gigawatt portfolio supported by 3.4 GW of secured power and 1.6 GW in advanced-stage procurement.

Goodman Group’s development strategy is anchored in high-density, low-supply metro zones, where demand for cloud and AI workloads is outpacing infrastructure. Projects include a 1,000-megawatt campus in Tokyo (TYO05), a 200-megawatt dual-building development in central Paris (PAR02), a 150-megawatt multi-site expansion in Los Angeles (LAX01), and a 90-megawatt facility in Sydney’s Macquarie Park. All sites have confirmed power availability and are progressing through early-stage site preparation and construction.

The company has also confirmed a flexible approach to design and delivery, offering powered shell, fully fitted, and operated facility options. Goodman Group reported that approximately 45 percent of current development is already pre-leased, with a 7.5 percent yield on cost across its AUD 12.4 billion work-in-progress. This pre-commitment model provides visibility and derisks the rollout while allowing the Group to scale capital-efficiently.

What does Goodman Group’s real estate performance indicate across logistics and industrial segments?

While data centres have taken the spotlight, Goodman Group continues to maintain strong logistics fundamentals. As of 30 September 2025, the company’s total property portfolio stood at AUD 85.9 billion, with occupancy holding at 96.1 percent across managed partnerships. Excluding China and Hong Kong, occupancy reached 97.7 percent. Like-for-like net property income rose 4.2 percent year-on-year, and 6.1 percent outside of Greater China.

The company leased 3.7 million square metres globally over the past 12 months, generating approximately AUD 519 million in annualised rental income. Lease tenure averaged five years, while rental reversion remained strongly positive at 13 percent, indicating substantial room for upside as existing leases roll over to higher market rates.

Valuations showed modest increases during the quarter, supported by stable cap rates, limited new supply, and strong cash flow visibility. This stability is expected to support portfolio returns through FY26, even as capital is rotated into new digital infrastructure projects.

How is Goodman Group funding its growth and managing development risk across its AUD 72.1 billion AUM base?

Goodman Group’s development strategy is heavily reliant on capital partnerships and co-investment. As of the latest quarter, assets under management (AUM) remained steady at AUD 72.1 billion, though post-quarter developments will see that increase by AUD 2 billion due to the formation of a second North American partnership.

Approximately 40 percent of development projects are being executed on behalf of third parties or within managed partnerships. This structure allows Goodman Group to retain operational control and upside while conserving balance sheet flexibility. Its largest platform holds AUD 32.1 billion in assets with a 28.9 percent Goodman co-investment stake. Across regions, co-investments range from 15 to 55 percent, depending on the strategic alignment and maturity of the partnerships.

The company is currently raising equity for new data centre partnerships in Europe and Australia, adding to existing joint ventures in Japan and Hong Kong. With funding progressing across multiple geographies, Goodman is preparing to enter a new phase of delivery by the second half of FY26.

What are institutional investors focusing on as Goodman Group’s share price lags sector peers?

Despite being one of the most resilient names in Australian REITs, Goodman Group’s share price has underperformed. The stock closed at AUD 31.42 on November 5, reflecting a 13.44 percent year-on-year decline and a 21.89 percent underperformance relative to the ASX 200. The stock trades at a forward price-to-earnings multiple of 36.79 with a yield of 0.95 percent, highlighting its growth-heavy profile.

Institutional turnover on the day exceeded AUD 102 million, and trading volume surpassed 3.2 million shares—roughly 33 percent above its four-week average—suggesting continued institutional interest during the pullback. Broker sentiment remains stable, with three “Buy” recommendations and two “Hold,” and no “Sell” ratings recorded.

Analysts are likely to focus on project activation timelines, capital deployment cadence, and confirmation of pre-lease metrics in the February 2026 results. The Group reaffirmed its FY26 guidance for 9 percent operating EPS growth, though management noted that development activity and earnings may be weighted toward the second half of the fiscal year.

What is the strategic outlook for Goodman Group heading into the second half of FY26 and FY27?

Chief Executive Officer Greg Goodman stated that the Group is building into demand by accelerating project starts in supply-constrained markets. The aim is to secure first-mover advantage in urban digital infrastructure while retaining the operational discipline that underpins its logistics legacy.

Over 500 megawatts of data centre development are expected to be active by June 2026. An additional pipeline of 1.3 gigawatts has been identified across Goodman Group’s landbank. Secured power connections are in place, and multiple sites are progressing through advanced site prep, enabling near-term deployment.

At the same time, Goodman Group is pursuing monetisation opportunities within its Australian portfolio through rezoning and multi-storey redevelopment. The company expects increased activity in industrial leasing into FY27, particularly for automation-enabled assets demanded by large logistics customers.

As digital workloads and cloud infrastructure scale globally, Goodman Group is positioning itself not merely as a logistics real estate manager, but as a key player in essential infrastructure delivery. The strategic reallocation of capital toward hyperscale data centres and its proven partnership model may provide the foundation for long-term growth and resilience—even in volatile equity markets.

What are the top insights from Goodman Group’s Q1 FY26 results and AUD 17.5 billion digital infrastructure push?

• Goodman Group (ASX: GMG) reported AUD 12.4 billion in development work-in-progress as of 30 September 2025, with a projected increase to more than AUD 17.5 billion by June 2026.
• Data centres accounted for 68 percent of total WIP, underlining a major strategic shift toward digital infrastructure and AI-era workloads.
• The company plans to activate approximately 500 megawatts of new data centre capacity by June 2026, with a total secured pipeline of 1.8 gigawatts.
• Key metro projects include Paris, Tokyo, Frankfurt, Los Angeles, and Sydney, all located in power-constrained urban zones.
• Goodman Group’s total property portfolio reached AUD 85.9 billion, with 96.1 percent occupancy across its partnerships and 4.2 percent like-for-like net property income growth.
• Yield on cost for work-in-progress was reported at 7.5 percent, and 45 percent of developments are already pre-committed.
• Annual leasing activity totalled 3.7 million square metres, generating around AUD 519 million in rental income.
• Assets under management remained steady at AUD 72.1 billion, with a AUD 2 billion increase expected post-quarter following a new North American partnership.
• Capital strategy includes ongoing fundraising for new data centre partnerships in Europe and Australia, adding to existing platforms in Japan and Hong Kong.
• Despite a 13.44 percent stock price decline over the past year, broker sentiment remains positive, and Goodman reaffirmed its FY26 OEPS growth target of 9 percent.