Premium commercial property set to surge in 2025: CBRE
The commercial property market is predicted to yield substantial returns in 2025, with premium property in areas such as Sydney’s CBD office sector expected to perform particularly strong.
CBRE has forecast that investment volumes for commercial property will continue to recover over the year, growing investment volumes by 15 per cent to $36 billion in 2025.
The commercial real estate firm’s findings showed that this positive momentum is expected to continue into the next year, where projected growth of 23 per cent in 2026 would take the value of investment volumes to $44 billion in 2026.
Across the various market segments, CBRE noted that the office sector is expected to see the most growth in investment volumes in 2025 at 25 per cent, followed by increases of 10 per cent each for the industrial, retail and hotel sectors.
The report stated that CBRE expects “pockets of exceptionalism” around premium property and precincts in 2025, with areas such as Sydney’s central business district (CBD) office sector expected to outperform other assets in both rental growth and capital appreciation.
More broadly however, CBRE stated that further rental growth is expected for offices in 2025 as a result of the “major contractionary activity” and sublease availability of the past few years appearing to have passed.
The firm also stated that the large gap in rents between existing office buildings and newer developments is helping to bolster growth in stronger performing markets, such as Sydney and Brisbane.
As a result of these conditions, CBRE highlighted that “Brisbane and Sydney are likely to be the outperformers once again in 2025”.
While the office sector in markets such as Melbourne were said to have performed relatively weakly recently, the firm stated that the city is witnessing increasing centralisation into its CBD, which is helping to drive absorption in the commercial market and drive rents higher.
Industrial property sector forecast to remain strong
CBRE stated that demand for high-quality industrial and logistics assets in core locations is expected to remain strong in 2025.
The report noted that rental trends are expected to vary from market to market, with some areas set to undergo limited growth while others will continue to grow off the top of persistently low vacancy rates.
While Australia’s current industrial vacancy rate of 2.5 per cent is one of the lowest globally, CBRE stated that normalised demand levels are expected to place “upward pressure” on the vacancy rate over the year.
Despite these conditions, the firm projected that Australia will continue to hold one of the lowest vacancy rates globally by the end of the year.