KPMG Commercial Property Market Update

The office sector remains under pressure from flexible work trends, rising unemployment, and falling values. However, national vacancy rates are beginning to ease, face rents are lifting in core markets, and investor sentiment is improving as interest rate cuts are anticipated.

Retail income returns are at their highest since 2016, helping the sector outperform office and logistics. Capitalisation rates have stabilised, and investor demand is growing for quality retail assets with strong fundamentals or mixed-use potential.

Industrial returns have recovered to 3.3% after two positive quarters. Income growth continues to offset capital losses. Vacancy rates remain among the lowest globally, and strong occupier demand is driving new supply and space reallocations across states.