The Goodman Group (ASX: GMG) share price has soared 116% over the past five years, as the chart below shows. I think the business has the potential to deliver a lot more growth for investors in the coming years.
The business owns, develops, and manages high-quality sustainable logistics properties and data centres in major global cities that are critical to the digital economy. It has operations in Australia, New Zealand, Asia, Europe, the UK, and the Americas.
Its portfolio includes logistics and distribution centres, warehouses, light industrial, multi-story industrial, business parks, and data centres.
Now that we know what it does, I'll explain why I think it has growth potential.
Image source: Getty Images
Strong demand for industrial space
Goodman says that there is a desire by (prospective) tenants for modern, sustainable logistics facilities in central locations, where automation can improve productivity. Space for these facilities is "scarce" and supply of new buildings in Goodman's locations remains "limited".
There are a number of drivers for industrial space, such as e-commerce growth and data centres.
Goodman said that in the data centre space, it continues to see significant capital expenditure growth from hyperscale operators as they work to meet the rising demand for cloud and AI services.
Goodman boasts of having a globally diverse portfolio of identified development opportunities and a 5GW power bank concentrated in low latency, metropolitan areas, so it's "well-placed to support these growing requirements".
This strong demand is helping drive the rental profitability of the business. In the FY25 third quarter, the business reported 4.5% like for like annual net property income (NPI) growth with properties in its partnerships.
The business is expecting to report operating earnings per security (EPS) growth of 9% in FY25, demonstrating strong financial progress and providing a strong support for the Goodman share price.
Work in progress
A key part of the growth prospects for Goodman shares is its work in progress (WIP), being the new buildings and projects that it's working on.
At 31 March 2025, it had WIP of $13.7 billion, representing an annualised production rate of $6.2 billion. Pleasingly, the yield on cost (YOC) on the current WIP is 7.1%, while the YOC on commencements (for the nine months to 2025) is 9%.
The business said that around 68% of WIP is either pre-sold or being built for third parties or partnerships. According to Goodman, more than half of the WIP is related to data centres under construction.
In terms of the geographic spread, 20% of the WIP is across ANZ, 40% is in Asia, 23% in the Americas, and 17% in Europe and the UK.
I think project completions will drive significant value for Goodman shares in the coming years.
Rate cuts
I don't know how many times the RBA will cut the cash rate over the next year or two. But, experts are expecting more rate cuts could be on the way.
For a property and asset-focused business like Goodman, rate cuts can be a significant boost for the business as it increases the value of existing properties and may help drive demand for more industrial space.
While Goodman doesn't have as much leverage (debt) as other property businesses, rate cuts could also help boost its operating earnings.
I think Goodman shares have a promising future in the medium term and long term.
