A SNAPSHOT OF EXPECTATIONS FOR COMMERCIAL PROPERTY IN 2025
The commercial property market shows a mixed outlook: high vacancy rates in office spaces, declining retail prices, and industrial properties continue to dominate as the top asset class.
Industrial properties remain the preferred choice for investors, with Queensland standing out as the top destination for investment due to its strong growth potential.
The office vacancy rate is gradually improving, but remains stubbornly high, with low prices and rents even after incentives are applied.
Melbourne is facing the highest office vacancy rate in the country, but presents exciting opportunities in the industrial sector, with more properties available for sale and increasing rental yields.
With increasing retail property stock in Victoria, now is the time to make a move as the market presents unique investment opportunities.
A SNAPSHOT OF EXPECTATIONS FOR COMMERCIAL PROPERTY
This week’s commentary is based on the latest NAB survey, which outlines commercial property expectations for 2025. Industrial property remains the standout, expected to see the highest price growth, while office properties are anticipated to experience smal declines, and retail continues to lag behind.
Key highlights from the survey:
Office Prices: Negative expectations persist in VIC (-4.7%) and NSW (-1.2%), while SA/NT leads the growth at +3.4%. Other states expect moderate growth
Retail Properties: WA is forecasted to see a slight increase of +1.8%, while VIC is expected to fal by -3.0%.
Industrial Property: Prices are expected to rise in a l states, ranging from +0.4% in WA to +3.2% in QLD, with industrial properties set to remain the growth leader in the near term (+3.1%).
Vacancy Outlook:
Office Vacancy: National vacancy is expected to fal to 9.4% in the next 1-2 years, with VIC seeing the highest vacancy at 13.2%, though improvement is expected.
Industrial Vacancy: Remains low at 3.4%, with the outlook stable for the next 1-2 years
Retail Vacancy: Expected to ease from 7.1% to 6.1% over the next 1-2 years.
Rent Outlook:
Industrial property remains the leader in rental growth, expected to grow by 2.3% and 2.8% over the next 1-2 years, with QLD seeing the highest growth (3.1%) in the next year
Investor Insights:
While I expect rent and price growth to outperform the survey’s estimates, the key takeaway is the continued dominance of industrial property as the top asset class and Queensland as the preferred investment destination. However, despite the chalenges, Victoria sti l presents attractive opportunities for investors, with favourable prices and yields likely to emerge, driven by sentiment and market expectations.
