It’s no secret that the residential market has seen plenty of attention this year, especially since rates first started to fall in February. But in the background, commercial property has quietly become one of the most competitive asset classes in the country. This is certainly the case in places like Perth, where stock is near impossible to secure, and Queensland, where confidence is very high.
In Perth, the industrial market is so tight that investors are now struggling to find anything of real quality. Vacancy periods have fallen to just 2–3 weeks in many cases, and the strongest assets are snapped up well before they hit the market.
That kind of demand has pushed prices higher, and while there’s still demand, we’re likely at or near the top.
In Queensland, we’re seeing something different. Buyers are becoming more optimistic. Thanks to a strong economic outlook and major infrastructure projects ahead of the Olympics, sentiment has rebounded sharply.
According to the latest NAB Commercial Property Index, Queensland posted the highest confidence levels in the country at +47, which was well above NSW and Victoria.
And when you look at leasing conditions in Brisbane or the Gold Coast, it’s easy to see why. Demand is strong, lease-up times are quick, and there’s ongoing business activity fuelling growth in both industrial and retail sectors. But not all markets are equal.
Melbourne’s commercial sector continues to underperform. While retail is beginning to stabilise, and we’re seeing some improvement in activity, the office sector is still dealing with high vacancy rates, which are now at 15%, making them the highest in the country. Confidence remains low, especially in the CBD, where demand hasn’t bounced back as expected.
That said, Melbourne’s longer-term appeal hasn’t disappeared. With policy changes potentially on the horizon and the introduction of Victoria’s Commercial and Industrial Property Tax (CIPT), the current softness might actually present an opportunity for smart investors looking ahead to 2026 and beyond.
One factor that’s often overlooked is the structure of Victoria’s new CIPT regime. If a property transacts after July 2024, the buyer pays stamp duty once, then in 2035 shifts to an annual tax of 1% on site value.
For long-term holders, that could be manageable. But what it means is that the next 10 years are likely to see a wave of strategic divestments, particularly from owners who don’t want to be caught holding an underperforming asset in a higher-cost environment.
It’s this kind of change that reinforces the need for local knowledge and forward planning in the commercial sector. The best opportunities right now aren’t necessarily the obvious ones.
Industrial continues to be the most resilient asset class, both for rental growth and investor demand, but even here, timing matters. In places like the southeast of Melbourne, land constraints are becoming more pressing. Compared to the north and west, the southeast simply has less land to develop, and that scarcity is beginning to impact pricing.
We’re seeing rents rise and tenants compete for space, which is great for landlords, but means the window for acquiring well-located stock is narrowing.
Retail, meanwhile, is stabilising. Especially in Melbourne, sentiment is starting to shift back into positive territory. It’s not where it was, and it’s still well behind industrial, but the worst appears to be over. In fact, national retail property sentiment jumped 24 points last quarter, returning to positive territory for the first time since 2017.
That said, investors need to be selective. Good retail is performing. But average retail, particularly in oversupplied or transitional pockets, still carries a lot of risk.
Then there’s the office sector. While some suburban office assets are being re-evaluated for alternate uses or offering value at a discount, CBD vacancy rates remain high. Melbourne and Sydney are still trying to figure out what the future of work looks like, and the data hasn’t quite settled yet. In terms of leasing, we’re seeing improvements in some outer metro areas where space is better priced, but for now, it remains the riskiest of the four core commercial asset classes.
Overall, the commercial property cycle is becoming more nuanced and more reliant on local insight, sector-specific expertise, and clear strategy. Whether it’s industrial in Perth, retail in Melbourne, or mixed-use in Queensland, the money is moving where the fundamentals are strongest.