Pallas Capital is in growth mode.
The Sydney-headquartered, boutique non-bank lender, which works in the growing commercial property markets across Australia and New Zealand, is fresh off the heels of a new $500 million Australian lending vehicle – dubbed Pallas Funding Trust No. 5 (PFT5) and backed by Wall Street heavy hitter Morgan Stanley – has new offices opening around Australia and closed nearly $3 billion worth of transactions in financial year 2025 alone – or roughly $8.6 billion since the firm's inception in 2016.
And though Pallas is still a young firm, it has also previously partnered with global giants like Ares Management and Goldman Sachs. Now, with a new office recently opened in Adelaide – joining existing locations in Sydney, Melbourne, Brisbane, Auckland and Christchurch – Pallas continues to expand its national footprint. Next on the expansion roadmap: offices in Western Australia and Canberra, driven by rising demand for commercial real estate. In addition, through PFT5, the firm intends to offer pre-development, residual stock and investment property loans ranging from $15 million to $35 million, targeting Australia’s growing middle-market commercial real estate sector.
"Which is exactly where we see the most opportunity right now," Jason Arnold, head of origination at Pallas (pictured above), told Australian Broker.
"The real momentum is only just kicking in," he added. "Institutional capital is increasingly flowing into the non-bank space. And that’s a sign of where the market is heading."
Australian Broker sat down with Melbourne-based Arnold for an exclusive interview to explore Australia's booming commercial middle market, the growing opportunity for brokers, the future of Australia's lending markets and what’s ahead for Pallas in 2026.
Jason Arnold: We’re growing fast, and a big part of that is getting the right people in the right places. Opening in Adelaide was about having boots on the ground to serve a growing pipeline in South Australia. We’ve now got experienced originators and credit professionals based locally. These are experienced people who know the market, the network and the opportunities. As we continue to expand our national footprint, we’re focused on building local capability in key growth corridors. For us, growth isn’t just about more volume. We also really value being closer to the deal and delivering a high-touch service that really adds value for brokers and borrowers alike.
JA: We’re incredibly proud to have closed nearly $3 billion in transactions in financial year '25. But the real momentum is only just kicking in. The news that Morgan Stanley has backed our new $500 million lending vehicle is a huge endorsement – Not just of Pallas Capital, but of the opportunity in Australia’s mid-market commercial real estate sector more broadly. This partnership allows us to lend at scale to high-quality borrowers across the country, particularly for pre-development, residual stock and investment property loans.
Right now, we’re seeing strong opportunities in Sydney and Brisbane, where the development pipeline remains active and borrower demand for flexible, mid-sized funding is high. South Australia is also emerging as a growth region off the back of increased infrastructure spend and housing activity. Melbourne’s been a bit slower, but we’re confident it will come back. It’s just a matter of timing. With institutional backing like this, we’re better positioned than ever to serve the market with competitive funding and get quality deals moving quickly.
JA: Getting into commercial lending isn’t something you can fast-track. But there are some smart, practical ways to build your footing. Start by investing in your education: industry bodies like CAFBA [the Commercial and Asset Finance Brokers Association of Australia] offer great training to build your technical base. From there, one of the best things you can do is partner with an experienced commercial broker or lender. Share a deal, split a fee and learn by doing. The commercial space is collaborative. So don’t be afraid to reach out, ask questions and lean on credit experts who know how to structure deals that get approved. Take the time to understand credit, learn how to structure a deal and be across the regulatory landscape too. If you invest in yourself and build the right network and foundation, the rest will follow.
JA: If you want to stand out in commercial finance, it starts with doing the groundwork well. The best brokers we deal with come to the table with complete, well-structured submissions. They know their deals inside out and present them in a way that helps credit say ‘yes’ to them pretty quickly. That alone puts them ahead. Another key step is building strong relationships with lenders who specialize in the space. Work closely with teams like ours who have credit experts on the ground. We’ve also found there’s a lot of value in workshopping deals together. Another piece of advice would be: don’t underestimate the power of local knowledge. Being plugged into your market and knowing what’s happening on the ground gives you real cut-through with clients and lenders alike.
JA: Formal qualifications help, but they’re not everything. Success in commercial lending has more to do with practical experience and strong relationships. You can’t shortcut time in the market. Being exposed to different deal types, structuring challenges and credit decisions is what builds real capability. That said, tapping into industry and aggregator resources and training is a great way to lift your technical game. But if I had to pick, I’d take a broker who’s been in the trenches, partnered with experienced people and built a solid lender network over someone with a certificate but no hands-on deal flow.
JA: Yes, we definitely see that growing. In fact, it’s already growing and we see no reason for that trend to reverse. There’s more awareness now that brokers can add real value in the commercial space, especially as deals become more complex and borrowers need help navigating both the bank and non-bank landscape. Education is improving too. More brokers are making the shift from resi into commercial, and non-bank lenders like us are stepping up to support them with credit expertise and local market knowledge. Over time, I think we’ll see broker share in commercial get closer to where it is in residential. Maybe not 76%, but something more like 60% feels realistic. The demand is there. So it’s just about the capability catching up.
JA: We’re definitely seeing increased scrutiny around responsible lending, credit policy and risk management, and it’s lifting the bar for everyone. For lenders, it means tighter processes and stronger documentation. For brokers, it raises the stakes on how deals are presented. You can’t just rely on a sharp rate. You need to know how to structure the deal properly and meet compliance expectations. The brokers who understand this and work closely with lenders to get it right are the ones who’ll thrive. It’s less about volume now and more about quality and execution.
JA: We’re heading into 2026 with confidence. Institutional capital – like the $500 million facility we just secured with Morgan Stanley – is increasingly flowing into the non-bank space. And that’s a sign of where the market is heading. There’s strong belief in the fundamentals of Australian commercial real estate, especially in the mid-market. I think we’ll see more institutional players chasing yield and backing lenders who know how to originate and manage risk effectively. For developers and brokers, that means more funding options and greater confidence to move forward with projects.
JA: I expect momentum to continue into FY26. Our outlook is for things to get busier from here. We’re already seeing a pickup in activity: borrowers have recalibrated to the current rate environment and there’s renewed interest in launching projects that were shelved during the uncertainty of the past year. With banks still taking a cautious approach, we’re fielding more enquiries for pre-development, residual stock and investment loans, all of which are in the sweet spot for our new Morgan Stanley-backed vehicle. We’ve also got strong liquidity and a lower cost of capital, which puts us in a great position to service that demand quickly and competitively.
JA: We’ve got a solid pipeline of mid-sized deals across Sydney, Brisbane and Adelaide. Those deals vary from residual stock loans in inner-city markets to construction finance for boutique apartment projects and commercial assets. The new lending vehicle (PFT5) is purpose-built for deals in the $15 million to $35 million range, which is exactly where we see the most opportunity right now. We're also continuing to invest in our tech stack and onboarding tools to make the experience even more seamless for brokers. Between the capital we’ve raised and the talent we’ve added across our offices, Pallas is really well placed to scale up and deliver for both borrowers and brokers in 2026.
