Australian Commercial Property Market — Insights and Outlook

Commercial property vacancy rates vary significantly across Australia’s commercial property markets, and that variation is important to understand before you make a purchase or financing decision. In Sydney, CBD office vacancy is sitting at approximately 13.8% — a reflection of ongoing tenant consolidation and a strong flight-to-quality dynamic where premium stock is absorbing while secondary-grade space continues to soften. Industrial vacancy in Sydney, however, is around 2.9%, which remains very tight by historical standards.

In Melbourne, CBD office vacancy is considerably higher — estimated at 16–18% — and lender appetite reflects that. Brisbane’s CBD office market is in noticeably better shape, partly because infrastructure-led demand is supporting absorption ahead of the 2032 Olympics. Perth’s industrial market is performing strongly on the back of resources sector activity.

We track office vacancy data from the Property Council of Australia and industrial vacancy from CBRE, and we update each city page when new data publishes. You can see Sydney’s full vacancy tracker on the Sydney market page.

When it comes to commercial property yields in Australia, the range varies considerably by city, sector, and asset quality, so it’s genuinely difficult to give a single national figure that means much. That said, based on what I’m seeing in active transactions right now, Sydney commercial property yields are broadly ranging from around 5.25% to 7.50% across sectors — with industrial and logistics at the tighter end and retail at the wider end.

Perth and Adelaide typically yield higher than Sydney and Melbourne for comparable assets. That’s not a signal of weaker fundamentals — it’s largely a reflection of lower entry prices rather than weaker income. Meanwhile, medical and allied health assets have seen meaningful yield compression in most markets over the past two years, driven by SMSF demand and the long-lease, quality-covenant nature of the tenancies.

It’s worth being clear: these are observations from active transactions, not a formal valuation index. Whether a particular yield is appropriate for your situation depends entirely on your objectives, and that’s a conversation worth having with your financial adviser before you make a move.

Overall, the post-rate-cut environment has meaningfully improved sentiment — particularly for owner-occupiers who were priced out at higher borrowing costs. That segment is the most active we’ve seen in several years, especially in healthcare, professional services and light industrial.

Nationally, industrial and logistics remains the standout sector. Supply constraints are keeping vacancy low, demand from logistics and e-commerce operators is sustained, and lender appetite is consistently strong across all our major markets. Medical assets, similarly, continue to attract competitive finance — the combination of essential services demand and quality tenants makes them popular with both investors and lenders alike.

CBD office is the most nuanced part of the outlook. Premium-grade stock in well-connected locations is absorbing well, and the flight-to-quality story is real. However, secondary-grade office space faces structural headwinds that lower interest rates alone won’t resolve. If you’re considering a CBD office purchase, the quality and location of the specific asset matters far more than the broad sector trend.

Perth stands out nationally for having the strongest cross-sector lender appetite right now, driven by resources sector confidence. Brisbane’s infrastructure pipeline is supporting demand ahead of the Olympics. You can read our current national read in the Broker’s Pulse section above, which I update monthly from active deal flow.

Industrial and logistics is the clear standout right now — low vacancy, sustained tenant demand, and the most consistent lender appetite across all major Australian cities. That consistency is worth noting: most sectors have city-level variation in how lenders respond, but industrial is broadly well-supported everywhere.

Owner-occupier transactions are also performing strongly. Lenders generally offer their best LVR and rate conditions for business owners buying their own premises, which means better outcomes than a comparable investment purchase in the same location.

Medical and allied health continues to attract competitive finance, particularly through SMSF structures, where the combination of long leases and essential services tenants makes the asset class genuinely attractive to lenders. Retail has stabilised in most markets but remains selective — neighbourhood convenience retail is performing better than larger format or discretionary-focused centres. CBD office is the most lender-selective sector, with approval very much depending on asset quality, location, and lease covenant rather than sector-wide appetite.

Sydney is the only live city page at present, with verified vacancy data, yields, sector conditions and precinct analysis updated regularly from active transactions. Melbourne, Brisbane, Perth, Gold Coast and Adelaide are in preparation and will be published as each city’s data reaches publication standard. The national Australia overview page is also live. We’re adding city pages progressively through 2026 — if your city isn’t live yet, the comparison table above gives you the best cross-city overview we can currently provide.

Published reports from CBRE, JLL, Knight Frank and the Property Council are genuinely useful sources — we reference and link to them directly on each city page because the data is credible and important. However, there’s a fundamental timing gap: by the time transaction data is compiled, verified, and a report published, it typically reflects conditions from three to six months ago.

What we track here is different. It’s what lenders are actually doing right now, drawn from active submissions across our panel of 60+ specialist lenders: which lenders are competitive in each market, where LVR policy has tightened or loosened, where valuations are coming in short of purchase price, and how sector appetite is shifting. That forward-looking, transaction-level perspective doesn’t exist anywhere else in published form — it comes directly from being in the market every week. You can see what’s currently available for commercial property on our current rates page.

All observations on this site are written by Nadine Connell, principal of Smart Business Plans. I’ve been arranging commercial property finance across Australia since 2009 — over $550 million in settled transactions, across every major city and most property types. The market observations I publish here come directly from that active deal flow, not from data aggregators or secondary sources.

Vacancy and yield data comes from publicly available sources including the Property Council of Australia and CBRE, with clear source attribution and update schedules noted on each city page. The lender appetite signals — what we describe as Strong, Improving, or Selective by sector — are my direct assessment from current submissions. They’re professional observations from someone writing loans weekly, not a formal statistical index, and I think that distinction matters.

No — and it’s worth being clear about that. The content throughout this section represents professional observations based on active commercial finance activity. It’s general in nature and does not constitute financial product advice, investment advice, or a recommendation to acquire or dispose of any property or financial product. Commercial property decisions are significant ones, and you should consider your own objectives, financial situation and needs carefully, and seek independent professional advice before making any financial or property decision. Smart Business Plans Pty Ltd (CR553930) is an authorised representative of Loan Market Services Pty Ltd (ACL517192).

Yes — you’re welcome to reference and cite the observations published here, and I genuinely encourage it. The one condition is that you attribute the content to Nadine Connell at Smart Business Plans and link back to the relevant page. The observations are original professional commentary, and they shouldn’t be reproduced in full without permission. If you’re a journalist, researcher, or analyst and would like to discuss anything further, feel free to get in touch directly.