Australia Commercial Property Market Size, Share, Growth Analysis Report and Forecast Trends 2024-2032

Australia Commercial Property Market Trends

The Australia commercial property market offers several benefits, including strong demand fueled by a growing economy, stable income from long lease terms, and potential capital appreciation. Investors can benefit from tax advantages through deductions and depreciation, while diversification can mitigate overall risk. Lease agreements typically include inflation protection via rent increases. In Australia, a capital gain occurs when an investment is sold for more than its purchase price, adding to taxable income as capital gains tax (CGT). Individuals or trusts holding commercial property for more than 12 months may be eligible for a 50% CGT discount, lowering their tax liability on gains.

Additionally, owning commercial property can support business growth and generate extra income through leasing. Continual infrastructure development boosts property values, and these properties support local economies by generating jobs and services. Overall, the market offers many benefits for wealth creation and community development, further fueling the growth of the Australia commercial property market.

Australia Commercial Property Market Growth

The Australia commercial property market growth is being driven by the country’s strong economy and low unemployment, which foster a positive environment for commercial real estate investment. Increasing urbanisation drives demand for office, retail, and industrial spaces, especially in major cities. Furthermore, continuous investments in infrastructure improve accessibility, draw in businesses, and lead to increasing property values. In July 2024, JustCo, Asia's top flexible workspace provider, announced the opening of JustCo Emporium Melbourne its seventh centre in Australia. This work-life destination addresses the rising focus on wellness, highlighting JustCo's commitment to providing sustainable and flexible workspace solutions that foster a balanced integration of work and life.

The e-commerce boom has spiked demand for logistics and warehouse spaces, benefiting the industrial sector. Robust foreign investment aims for stable returns, while a variety of options in office, retail, and mixed-use properties draw a wide range of investors. The emphasis on sustainability also resonates with those looking for long-term value. Furthermore, the Australia commercial property market revenue is being increased, as recent CBRE research reveals that about 850,000 square meters of multi-storey warehouses will be developed in Sydney from 2023 to 2027 across 20 projects.

Australia Commercial Property Market Insights

• The Australian Bureau of Statistics reports that the value of non-residential buildings increased by 12.4% to $4.92 billion in January 2024 compared to December 2023.
• Industry Reports indicate that the Australian building and construction sector handles over $162 billion in projects annually and represents about 10% of GDP, making it the fifth-largest sector in the economy.
• According to the ABS, there were 697 public hospitals in Australia in 2021–22, increasing to 700 in 2022–23. This growth reflects a rising interest in healthcare commercial properties, attracting investment from both private and institutional sources.

Industry News

September 2024

Adelaide-based prop-tech company RESO has introduced a commercial property version of its innovative online offer management platform, tailored specifically for commercial real estate agents. The RESO app assists agents in navigating essential elements of commercial transactions, including buyer qualification, demand creation, due diligence disclosures, price negotiation, and vendor reporting.

February 2024

Burgess Rawson has initiated Australia’s first major commercial property auction event for 2024, featuring a diverse range of over 25 premium assets nationwide. Investors looking for prime opportunities in sectors such as healthcare, early education, fast food, government, industrial, and retail can participate in Burgess Rawson’s Portfolio Investment Auction 166.

Australia Commercial Property Market Drivers

Rise of Flexible Workspaces

The Australia commercial property market is experiencing a growing trend toward flexible workspaces. As businesses embrace hybrid work models, the demand for co-working environments and adaptable offices has increased significantly. This shift helps companies lower overhead costs while offering employees a more dynamic work atmosphere, boosting the Australia commercial property industry revenue. In February 2024, Fortis secured planning approvals for USD 570 million in projects across three major developments in Sydney and Melbourne. Fortis, managed by the real estate financier and investment manager Pallas Group, includes the second tower of the USD 320 million Wiltshire House in Richmond, a USD 80 million commercial building in Manly, and a USD 170 million landmark precinct in Double Bay featuring Restoration Hardware (RH).

Sustainability and Green Buildings

The Australia commercial property market is increasingly centred around sustainability, driven by regulatory requirements and tenant preferences. There is a high demand for properties featuring eco-friendly designs and certifications like NABERS and Green Star, as investors recognize their long-term advantages, such as reduced operating costs and increased occupancy rates. This rising interest has led to the construction of green buildings that incorporate energy-efficient technologies and sustainable materials, further fueling the commercial property demand growth. The National Construction Code (NCC), which includes the Building Code of Australia (BCA) and the Plumbing Code of Australia (PCA), establishes the minimum standards for building design, construction, and performance nationwide. The NCC incorporates provisions aimed at enhancing sustainability, covering aspects like energy efficiency, water conservation, and overall environmental impact. It specifies requirements for building envelope design, insulation, glazing, lighting, and HVAC systems, all designed to minimize energy consumption and reduce greenhouse gas emissions, thereby promoting a more sustainable built environment.

Opportunities in the Australia Commercial Property Market

E-commerce and Logistics Demand

The Australia commercial property market dynamics and trends are being notably influenced by the growth of e-commerce, especially within the logistics and industrial sectors. As online shopping continues to rise, there is an increasing demand for warehousing and distribution centres, prompting developers to invest in large-scale logistics facilities. This trend is particularly strong in metropolitan areas where close access to transport networks is essential for efficient distribution. In 2021, the transport sector represented 55% of major infrastructure construction, significantly contributing to the growth of the Australia commercial property industry. Ongoing projects in 2024 include the $11 billion Melbourne Metro tunnel, the $6.8 billion Metro Tunnel, the $16 billion WestConnex (NSW), the $12 billion Sydney Metro, and the $9.3 billion Melbourne to Brisbane Inland Rail.

Market Restraints

Australia commercial property market faces several key challenges. Logistics and supply chain inefficiencies hinder timely deliveries, especially in rural areas, leading to higher costs and customer dissatisfaction. Regulatory hurdles regarding consumer protection and taxation complicate operations, particularly for smaller businesses. Increasing competition saturates the market, making it hard for new entrants to gain traction.

Additionally, concerns about data security and consumer trust can deter online shoppers. A digital divide limits access to e-commerce for some populations, particularly in remote regions, restricting overall market participation and growth potential. These factors collectively pose significant obstacles to the commercial property demand.

Australia Commercial Property Industry Segmentation

“Australia Commercial Property Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Type

• Offices
• Retail
• Industrial/Logistics
• Multi-family
• Hospitality

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Australian Capital Territory
• Western Australia
• Others

Australia Commercial Property Market Share

By Type Analysis

Retail properties offer stable income through long-term leases, providing reliable cash flow for investors. Australia’s strong consumer culture drives consistent demand, making this sector resilient. The variety of investment formats supports portfolio diversification, while prime locations contribute to property value appreciation. Retail spaces also encourage community engagement. In 2022, total retail spending in Australia reached USD 242 billion, fueling growth in the Australia commercial property market. The retail sector includes various property types, such as shopping centres, standalone stores, and online retail spaces, allowing investors to select options that fit their strategies.

The hospitality market is benefiting from Australia's expanding tourism sector, drawing both domestic and international visitors. Hospitality properties generate significant revenue through various income sources, including room bookings and dining. Long-term demand from business travelers and events adds stability, while prime locations can command higher prices, enhancing their investment attractiveness. In 2024, household spending on hospitality, particularly hotels, cafes, and restaurants, rose from 2.0% in December 2023 to 3.4% in January 2024, according to the ABS. This trend is driving demand of Australia commercial property market. The sector encompasses hotels, restaurants, bars, and resorts, providing a range of investment opportunities. Properties situated in key tourist areas or business hubs typically attract substantial investment due to their strong return potential.

Australia Commercial Property Market Regional Insights

Australia commercial property market is strengthened by regional diversity. Sydney and Melbourne excel in the office and retail sectors, embracing mixed-use and sustainable developments. Brisbane is seeing industrial growth fueled by e-commerce, while Perth concentrates on mining-related properties. Adelaide fosters small to medium enterprises, Hobart capitalizes on tourism, and Canberra maintains stable government office demand.

The ABS reports that private sector dwellings, excluding houses, experienced a monthly rise of 32.1% and an annual increase of 15.9% in July 2024. Dwelling approvals grew in New South Wales (25.2%), Victoria (20.1%), South Australia (9.9%), Tasmania (8.0%), and Western Australia (1.9%), while Queensland saw a decrease of 5.0% in seasonally adjusted terms.

Competitive Landscape

Australia commercial property market key players are focusing on developing, managing, and investing in residential, commercial, and industrial properties. Committed to sustainability and innovation, these companies aim to create vibrant communities and high-quality spaces. Their diverse portfolios feature mixed-use developments, retail centres, and logistics facilities, demonstrating a strong dedication to improving urban living and driving economic growth across various regions.

Key Industry Players

Lendlease Corporation: Based in Sydney, Australia and founded in 1958, this international company focuses on property and infrastructure, engaging in the development, construction, and investment of residential, commercial, and mixed-use projects. Committed to sustainability, Lendlease strives to create innovative spaces that benefit communities.

Meriton Group: Established in 1963 and located in Sydney, Australia, Meriton ranks among the largest residential property developers in the nation. The company specializes in high-rise apartment complexes, prioritizing quality, and design. Meriton is dedicated to sustainable practices and aims to provide innovative living solutions for diverse urban populations.

PACT Construction (ABN Group): Founded in 2002 and part of ABN Group, PACT Construction is headquartered in Perth, Australia. The company specializes in delivering high-quality residential and commercial projects throughout Australia. With an emphasis on innovative solutions and sustainability, PACT Construction seeks to improve communities through thoughtfully designed and efficient building methods.

Scentre Group Limited: Founded in 2014 and based in Sydney, the company manages, and develops retail properties in Australia and New Zealand. As the proprietor of the Westfield shopping centers, the company strives to develop vibrant retail spaces. Scentre Group emphasizes innovation and sustainability to improve the overall shopping experience.

Other key players in the global Australia commercial property market report include Stockland Corporation Limited, Frasers Property Limited, Multiplex, Mirvac Group, QUBE Property Group Pty Ltd. and Knight Frank Australia Pty Ltd. among others.

Recent Developments

September 2024

Adelaide designed a new economic future by leveraging its competitive cost base and business-friendly environment. Multi-million-dollar investments in the Lot Fourteen and BioMed City innovation districts created new jobs in fields like space, machine learning, and health sciences. The establishment of Australia’s first 10GBps fibre optic network positioned Adelaide as a prime investment destination.

May 2024

Australia’s Lendlease Group announced a strategic shift, including the exit from its overseas construction business and plans to accelerate capital recycling from offshore projects, aiming to reclaim A$4.04 billion. The company introduced a new Capital Release Unit to facilitate this process, while also focusing on its domestic operations and simplifying its structure.