Commercial property sales in Australia rose strongly in the first half of 2026, with industrial the standout, but successive rate rises are now cooling buyer interest, according to the realcommercial.com.au Commercial Property Update September 2026.
The volume and number of commercial deals in the six months to June were 21% higher than a year earlier, based on MSCI Real Capital Analytics data cited in the report. That momentum is expected to fade after the Reserve Bank (RBA) lifted the cash rate to 4.6% in September, its fourth increase this year.
Minutes of the RBA’s September meeting show the Monetary Policy Board judged business credit growth to be very strong and broadly based, while signalling it would keep doing what it considered necessary, “including increasing the cash rate target further if required.”
Buyers are already pulling back. Searches to buy commercial property on realcommercial.com.au have fallen year-on-year every month since October 2025. For-sale listings dropped 7% in the September quarter compared with the same period in 2025, led by office (down 14%) and retail (down 9%), while industrial listings rose 4%.
Industrial sales volumes in the year to June 2026 were 27% higher than in the previous 12 months. That demand has pushed yields lower. According to PropTrack data, gross yields compressed in every capital city over the September quarter, with Perth recording the sharpest annual fall, down 45 basis points to 4.4%.
The report, written by realcommercial.com.au senior economist Anne Flaherty (pictured), cautioned that this trend may not last: “Yield compression is now likely to slow, as rising interest rates drive upwards pressure.”
Office yields look too thin for the risk. Gross yields sit at or below 5.5% in every major capital measured except Brisbane, even though vacancy topped 10% across all capital city CBDs in July, according to the Property Council of Australia’s Office Market Report. Melbourne recorded 18.9% and Adelaide 16.3%.
Flaherty’s report concluded “these yields are likely below the level many investors are willing to accept”.
Underlying demand is coming from business formation. The number of businesses operating in Australia grew by 85,130, or 3.1%, over the 2025–26 financial year, even as unemployment rose to 4.6% in August from 4.2% a year earlier.
“More businesses means a growing need for premises to operate out of,” realcommercial.com.au noted. It said it was too early to tell whether tax changes in the May 2026 federal budget would push more residential investors towards commercial property.
Rule changes may also nudge some investors that way: since 10 August, self-managed super funds (SMSFs) can no longer use new borrowing arrangements to buy residential property, although they can still borrow to acquire eligible business real property.
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