Commercial property at a glance

Getting in on the ground floor of the commercial property valuation cycle

Falling interest rates have triggered a rise in commercial property values and the beginning of a new cycle.  Increasing investor activity has resulted in sales reaching $41.2 billion in 2025 (RCA) to the end of September, a level 9% higher than the same time in 2024.  Trading activity has been brisk this year, despite a global backdrop of uncertainty.

Early in the cycle is the logical time to enter the market, with values likely to rise in the years ahead.  There’s a diversity of risk/return positions investors can take at the moment based on asset and market performance and outlook.

Industrial property has been the most traded sector over the past 6 years, but retail is now also coming under intense buyer pressure which is lifting values at a higher pace than any other asset class.  Lower interest rates are providing the additional benefit of supporting retail property through increased household spending.

Investment in office property is still below its long-term share, as investors, owner occupiers and developers assess properties very selectively.  Tenants are making the most of generous leasing deals in quality assets, which is increasing vacancy in secondary properties.

CommBank is also seeing increased private investment in childcare centres, pubs and service stations. According to Stanley, “in the last financial year over 200 childcare centres sold around Australia, totalling $1 billion at an average price point of $4.9 million.  Many have very long leases, which enhances the investment attraction for many investors.”

Locations with strong growth potential

Australia is very fortunate to have strong population growth, which ultimately drives demand for commercial property.  Almost all parts of the country enjoy positive population growth.

Australia’s population growth was highly volatile during and post-COVID, but now its settling down to a more stable, but still strong rate of about 1.6% per annum, which is over 400,000 people per annum. 

The highest growth can be found in Victoria, South East Queensland, Western Australia and Western Sydney, but almost all parts of the country are growing, including most areas of Regional Australia.

The development of new infrastructure, including roads, light and heavy rail is supporting the creation of property development opportunities at a more local level.