According to property consultancy Cushman & Wakefield’s Market Outlook 2025 series, investment activity across Australian commercial property markets is set to accelerate in 2025, with the latest interest rate cut ushering in the next phase of the recovery cycle and strengthening market momentum.
The report indicates that a more diverse capital base, improved pricing alignment, and strong global demand will help drive investment volumes beyond 2024 levels.
The research shows alternative sectors had the highest transaction volumes in the past two years while traditional asset classes were subdued.
Annual transactions lifted over 50% in 2024 to $12.4bn as investors sought portfolio diversification, income and growth within the Build to Rent, student accommodation and data centres sectors.
“Australian commercial real estate has turned a significant corner, now more broadly in a phase of renewed growth.
“Investment volumes are expected to surpass 2024, even as assets in markets like industrial and alternative sectors remain very tightly held.
“We expect the appeal of alternatives to remain firmly in place after recording substantial multi-year growth.
“Economic volatility will remain a market reality, and the defensive role that alternative assets play in portfolios, and in some cases, structural growth, will continue to boost their appeal.”
Noral Wild, CEO, Cushman & Wakefield ANZ
New segments, including renewable energy and cybersecurity infrastructure, are also set to expand. Modelling future office investment shows that national annual transactions are expected to reach $13.3bn in 2025 – up from $9.8bn in 2024 – reclaiming the top spot in commercial property transactions, Cushman & Wakefield state.
Moreover, several tailwinds are set to continue positive momentum in volume and pricing, including stable capitalisation rates. For Logistics and Industrial (L&I) markets, annual investment volumes are set to move almost 40% higher in 2025, rising from $7.2bn in 2024 to $10.0bn this year.
“Investors and landlords across the commercial property sector have been positioning for the rebound in market conditions which continues to find firmer footing.
“A common theme across markets is Australia’s attraction as an investment destination and we expect a more diverse set of global investors to target domestic assets.
“While these are positive signs, different sub-markets and asset classes are moving at different speeds.
“Whether that’s stronger demand for prime grade office assets while fringe buildings are being repositioned or alternatives like student accommodation or data centres growing far faster than other markets.”
Dominic Brown, Head of Research, Cushman & Wakefield ANZ
This is underpinned by strengthening investor appetite with Cushman & Wakefield’s 2025 Capital Markets survey revealing that 97% of global investors plan to deploy capital, up from 87% last year. 60% plan to invest in the current quarter.
