Investment activity across Australian commercial property markets is expected to accelerate in 2025, following the recent interest rate cut that has ushered in a new phase of recovery and strengthened market momentum.
According to Cushman & Wakefield’s Market Outlook 2025 series, a more diverse capital base, improved pricing alignment, and strong global demand will drive investment volumes beyond 2024 levels.
The office sector is poised to reclaim its position as the top commercial property investment, with national annual transactions expected to reach $13.3 billion in 2025, up from $9.8 billion in 2024.
Sydney is projected to lead national office investment, closely followed by Brisbane, which is catching up to Melbourne.
Logistics and industrial investment volumes are forecasted to increase by almost 40 per cent in 2025, rising from $7.2 billion in 2024 to $10.0 billion.
This growth is underpinned by strengthening investor appetite, with 97 per cent of global investors planning to deploy capital, up from 87 per cent last year.
Alternative sectors, including data centres, build-to-rent, and student accommodation, are projected to reach $11.5 billion in investment in 2025.
New segments such as renewable energy and cybersecurity infrastructure are also set to expand.
Noral Wild, CEO of Cushman & Wakefield ANZ, stated: “Australian commercial real estate has turned a significant corner, now more broadly in a phase of renewed growth.”
The appeal of alternative assets is expected to remain strong due to their defensive role in portfolios and potential for structural growth.
Dominic Brown, Cushman & Wakefield Head of Research ANZ, highlighted Australia’s attraction as an investment destination, noting that a more diverse set of global investors is expected to target domestic assets.
The office demand recovery is predicted to be multi-speed, with varied transaction activity and rental growth across CBDs.
Brisbane is anticipated to record the highest prime net effective rental growth over 2025 at 12.1 per cent, followed by Melbourne at 3.4 per cent and Sydney at 2.6 per cent.
Return to office (RTO) mandates are influencing office demand in Melbourne and Sydney, with only a small percentage of large occupiers implementing full-time RTO policies.
New offshore capital sources are likely to emerge in the logistics and industrial market in 2025, including inflows from traditionally dominant markets and potential new entrants from Japan and Europe.
Australia continues to rank as the world’s tightest logistics and industrial market globally, with a vacancy rate of 2.5 per cent.
As the Australian commercial property sector enters 2025, investors and industry players can expect a year of growth and diversification across various asset classes, driven by improving economic conditions and strong global demand.
