If you’re thinking about buying commercial property in 2026, you’re probably wondering what the commercial property lending market is like right now.
Inflation is running hot, rates are likely to rise, and uncertainty is flowing through to business owners trying to make decisions about their biggest financial commitments.
Here’s what we’re actually seeing on the ground..
The Interest Rate Picture: Brace for a Hike
Let’s address the elephant in the room first.
After three rate cuts in 2025 brought the cash rate down to 3.60%, most borrowers expected 2026 would bring more of the same. That expectation has now been firmly put to rest.
Today’s inflation print came in at 3.80% – well above the RBA’s target band of 2-3% and higher than many economists predicted. Trimmed mean inflation is running at 3.2%. The message is clear: price pressures aren’t going away.
A February rate hike is now looking very likely, with some economists flagging the possibility of multiple hikes if inflation doesn’t start behaving.
For borrowers who were banking on further rate cuts this year, that’s a tough pill to swallow.
But here’s the perspective we’re sharing with our clients: the fundamentals of your commercial property investment matter far more than the next RBA decision.
Whether rates go up by 0.25% or even 0.50%, the difference in monthly repayments on a typical commercial loan is meaningful but manageable. If your deal only works with rate cuts, that’s a sign it was probably too tight to begin with. The business owners we work with who succeed in commercial property aren’t the ones who time the market perfectly – they’re the ones who buy quality assets with solid tenant profiles and realistic cash flow projections that can absorb some rate movement.
If anything, a rate rise could cool some of the competition and create better buying opportunities for those who are prepared.
The Lending Landscape Has Fundamentally Changed
This is where things get interesting – and where we’re seeing the biggest shift in how commercial property deals actually get done.
Traditional bank lending has tightened considerably. According to recent industry data, the average Loan-to-Value Ratio (LVR) for commercial property has dropped from around 74% in 2022 to approximately 66% today. That’s not a small change. For a $2 million property purchase, that’s the difference between needing $520,000 in equity versus $680,000.
Banks are also taking longer to assess applications and asking for more documentation. Debt-to-income ratios are under scrutiny. Self-employed borrowers – who make up the majority of commercial property buyers – are finding the process more challenging than it was even two years ago.
But here’s what’s happening on the other side of that equation: non-bank lenders are stepping up in a big way.
Private credit and specialist commercial lenders have moved from the fringes to the mainstream. These aren’t the “lenders of last resort” they were a decade ago. They’re sophisticated financiers offering competitive rates, faster approvals, and – critically – more flexible assessment criteria for borrowers who don’t fit the major banks’ increasingly rigid boxes.
We’re seeing strong demand for short-term private lending, bridging finance, and residual stock solutions. Self-employed borrowers who are the engine room of the Australian economy are finding capital for growth through channels that simply didn’t exist at this scale five years ago.
More brokers are stepping into commercial lending, and that trend is accelerating. It’s a great way to deepen client relationships, and business owners are benefiting from having more options than ever before.
The Commercial Property Market: Sector by Sector
If 2025 was the year commercial property found its footing, 2026 is shaping up as the year the recovery broadens.
Industrial and Logistics
Industrial has been the consistent performer for several years now, with investment volumes in 2025 reaching $6.7 billion – well above long-term averages. The fundamentals remain strong: e-commerce growth, supply chain reconfiguration, and the ongoing need for modern warehouse facilities close to population centres.
Within industrial, three sub-sectors are attracting particular attention:
Data centres are experiencing demand that far outstrips supply. The need for local, secure data infrastructure has never been higher, and investors are taking notice.
Cold storage facilities are benefiting from changing consumer habits and the growth of online grocery delivery.
Advanced manufacturing is seeing renewed interest as Australian businesses look to reduce supply chain risks.
For borrowers, industrial property typically attract favourable lending terms due to their strong tenant demand and relatively stable cash flows.
Retail: The Quiet Comeback
Retail was written off by many investors during the pandemic years, but 2025 told a different story. Stabilising economic conditions and rising consumer confidence supported what Knight Frank’s chief economist called a “long-awaited recovery.”
The combination of constrained new supply, steady foot traffic recovery, and rental growth made retail one of the standout performers last year – and that momentum is expected to continue through 2026.
The key distinction is location and format. Dominant shopping centres with limited nearby competition are best positioned. Neighbourhood retail centres anchored by essential services – think medical centres, supermarkets, and everyday convenience – are outperforming secondary locations.
We’re seeing renewed investor interest in well-located retail assets that offer attractive yields compared to other commercial sectors.
Office: A Tale of Two Markets
The office sector remains the most polarised. Premium-grade buildings with strong ESG credentials, modern amenities, and prime CBD locations are performing well, capturing tenant demand and maintaining low vacancy rates.
Secondary office assets are a different story entirely. The divergence between premium and secondary is widening, and we expect that gap to become more pronounced through 2026.
For borrowers looking at office investments, the message is clear: quality matters more than ever. Tenants are making value-driven decisions, favouring refurbished properties with new fitouts and superior amenity. Buildings that tick these boxes will continue to attract tenants and lender interest. Those that don’t may struggle on both fronts.
Alternative Assets: Where the Opportunity Is
Some of the most interesting conversations we’re having with clients involve asset classes that didn’t feature prominently in commercial property discussions five years ago.
Medical and healthcare facilities continue attracting strong investor interest. Australia’s ageing population and the shift toward preventative healthcare is driving demand for purpose-built medical centres, allied health hubs, and specialist facilities.
Childcare centres offer long lease terms and essential-service characteristics that appeal to both investors and lenders.
Self-storage facilities have emerged as a genuine asset class, benefiting from urbanisation, smaller dwelling sizes, and changing consumer behaviour.
These alternative assets often attract borrowers who are looking for stable, long-term income streams rather than speculative capital growth – and lenders tend to view them favourably when the fundamentals stack up.
What We’re Telling Our Clients Right Now
After working with over 3,300 business owners on their commercial property finance, certain patterns emerge. Here’s what we’re emphasising in our conversations at the start of 2026.
Don’t wait for rate certainty
If you’re holding off on a commercial property purchase waiting for the “right” interest rate environment, you might be waiting a long time. The borrowers who succeed focus on the asset, the tenant, and the cash flow – not on trying to predict RBA decisions.
Get your financials in order early
Lenders are scrutinising documentation more closely than they were two years ago. Business owners who come to us with clean financials, up-to-date tax returns, and a clear picture of their borrowing capacity move through the process faster and with less stress.
We always recommend starting your application process at least 8 weeks before you want to settle. That buffer gives you time to address any issues that arise without putting your purchase at risk.
Consider the full range of lenders
Access to 60+ specialist lenders means we can find the right fit for your specific situation – not just chase the cheapest headline rate. A lender who understands your industry, your property type, and your circumstances can be worth far more than a 0.25% rate difference.
Sometimes that’s a major bank. Often it’s not. The commercial lending market has evolved significantly, and borrowers who limit themselves to the big four are potentially missing out on better options.
Understand what you can actually borrow before you start looking
This sounds obvious, but we regularly speak with business owners who’ve found their perfect property only to discover they can’t get the finance they need – or can’t get it in time.
Getting a clear picture of your borrowing capacity before you start your property search saves time, reduces stress, and puts you in a stronger negotiating position when you do find the right asset.
The Bottom Line
Commercial property finance in 2026 rewards the prepared. The market is recovering and broadening, creating genuine opportunities across multiple sectors and locations. But the lending environment has shifted, and the strategies that worked three years ago may not be optimal today.
Know your numbers. Understand your options. Move decisively when the right opportunity appears.
If you’re considering buying your business premises or investing in commercial property this year, now’s the time to understand what you can actually borrow – before you fall in love with a property you can’t fund.
Smart Business Plans is a specialist commercial property finance brokerage serving business owners nationally. With access to 60+ lenders and over $550 million in funding helped arranged since 2009, we help Australian businesses navigate commercial property finance with expert guidance.
Ready to explore your commercial property finance options? Book a free consultation to discuss your situation with our specialist team on 1300 262 098 today.
