Australian Commercial Property Market Size
| Study Period | 2020 - 2029 |
| Base Year For Estimation | 2023 |
| Market Size (2024) | USD 34.07 Billion |
| Market Size (2029) | USD 51.14 Billion |
| CAGR (2024 - 2029) | 8.46 % |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Australia Commercial Real Estate Market Analysis
The Australia Commercial Real Estate Market size is estimated at USD 34.07 billion in 2024, and is expected to reach USD 51.14 billion by 2029, growing at a CAGR of 8.46% during the forecast period (2024-2029).
• Australia's commercial real estate market has flourished in recent years, spearheaded by prominent cities such as Sydney and Melbourne. These cities have witnessed robust demand for office spaces, retail properties, and industrial facilities.
• Australian commercial property sales in the third quarter of 2023 decreased by 58% to AUD 4.0 billion (USD 2.60 billion), compared to AUD 9.6 billion (USD 6.24 billion) for the third quarter of 2022.
• Sales in the office, logistics, industrial, and retail sectors decreased by 77%, 38%, and 29%, respectively, from AUD 1.2 billion (USD 0.78 billion) in office volumes in Q3 2023 to AUD 1.6 billion (USD 1.04 billion) in L&I volumes in Q3 2022, while logistics & industrial volumes decreased by 38% and retail volumes decreased by 29% compared to Q3 2022.
• Year-on-year (YoY) transaction volume in the first nine months of 2023 totaled AUD 11.8 billion (USD 7.67 billion), as compared to AUD 29.2 billion (USD 18.97 billion) in the full calendar year 2022.
• All commercial property transactions across all sectors (office, retail, logistics & industrial) showed a slight increase in volume in Q3 2023. The Q3 2023 office volumes increased 106% year-on-year (YoY) from USD 594 million in the June quarter (to USD 1.2 Billion) to USD 1.3 Billion in the September quarter (to Q4 2022).
• The biggest Q3 sales across all sectors were the USD 560 million sale of 20 prime industrial assets (50% interest) to UniSuper. Other notable sales included USD 465 million for Midland Gate Shopping Centre (WA), USD 313 million for 7 Spencer Street (Vic), USD 393.1 million for 44 Market Street (NSW), USD 296 Million for 1 Margaret Street (NSW), and USD 200 million for 189 kent street (NSW).
Australian Commercial Property Market Trends
Retail real estate is expected to drive the market
The national retail leasing market was relatively stable in Q3 2023, with a slight increase in gross rent during the quarter. The majority of tenant demand came from established retailers who took advantage of favorable leasing conditions to expand and optimize their store footprint.
In Q3 2023, retailers continued to be opportunistic. Several national fashion and hospitality groups continued to find new high-end retail space along Adelaide's CBD and regional enclosed centers. Louis Vuitton opened a pop-up shop at Adelaide Central Plaza alongside Rundle Mall, alongside luxury retailers Tiffany & Co, TAG, and Heuer.
Three project completions totaled 23,100 square meters, with Devwest's 14,000 square meter District Outlet Centre development in Parafield being the biggest project to complete over the quarter.
The development includes 65 outlet tenancies and plenty of food and beverage opportunities. Average rents were relatively stable across subsectors in the third quarter of 2023, with the strongest year-on-year growth in the large formats retail subsector, growing by 2.1% at an average of AUD 229 (USD 148.77) per square meter. Three major transactions were recorded over the quarter, with Early Settler, at 215 Grote Street, Adelaide, being the largest transaction at AUD 11.9 million (USD 7.73 million).
Adelaide's Office Market Witnesses Mixed Trends in Q4 2023
In the fourth quarter of 2023, net absorption was negative at 300 sq. m, with secondary grade net absorption (-24k sq. m) as the driver of the negative headline figure. On the positive side, it was 23,700 sqm for prime grade.
One office was completed in the market during the quarter, a Walker Corporation development of the Festival plaza along Adelaide’s Riverbank precinct in 40,000 square meters. Rental growth continued to gain momentum, increasing 1.6% in Q4 and 5.6% for the year. There were no major transactions in the fourth quarter, but development sites are still drawing some investor interest.
Vacancy rates in Adelaide increased in Q4 2023, with the headline vacancy rate increasing 2.2 percentage points (ppm) from 18.0% to 18.6%. The prime vacancy rate remained stable at 18.6% due to backfill space created by Adelaide’s largest historical supply of wave. The secondary vacancy rate increased 2.9 pp from Q4 2023 to 17,5% – the highest secondary grade rate increase since Q4 2012.
Q4 2023 saw a significant drop in occupier demand in Adelaide CBD, which marked the end of three consecutive positive quarterly net absorption figures. Adelaide CBD's quarterly net absorption was -300 sqm, driven by a combination of downsizing, centralization, and consolidation. It is important to note that most of the backfill from the occupancy of new buildings in this quarter had already been accounted for over the prior 12 months.
Australia Commercial Real Estate Industry Overview
The Australian commercial real estate market is strong and highly competitive. Australian commercial real estate is becoming a preferred destination for global institutional investors, driven by robust office space take-up, declining vacancy levels, and rising rentals. Small-scale developers are also merging with big real estate developers or exiting the market. Some of the country's major commercial real estate players include Lendlease Corporation, Scentre Group Limited, Mirvac, Pact Construction, and Multiplex Constructions Pty Ltd.
Australian Commercial Property Market Leaders
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Lendlease Corporation
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Scentre Group Limited
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Mirvac
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Pact Construction
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Multiplex Constructions PTY Ltd
*Disclaimer: Major Players sorted in no particular order
Australia Commercial Real Estate Market News
• October 2023: Costco is planning a major expansion in Australia, with several new warehouses under construction and several prime locations being considered for future locations. Costco currently operates 15 warehouses in Australia, with plans to expand to 20 within the next five years, based on current stores and potential locations.
• July 2023: A 45-storey BTR tower will be developed by Lendlease and Japanese developer Daiwa House, completing the final phase of Lendlease's Melbourne Quarter project and its second Build-to-Rent (BTR) project in Australia. The USD 650 million deal, similar to Lend lease's first 443-unit BTR project under construction in the 5.5 hectares of mixed-use space at Brisbane Showground, is a stand-alone investment and is separate from the company's ongoing efforts to build a wider BTR partnership, which will include several assets.
Australia Commercial Real Estate Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Drivers
4.1.1 Rapid Urbanization
4.1.2 Government Initiatives Actively promoting the Construction Activities
4.2 Restraints
4.2.1 Shortage of Skilled Labor
4.2.2 Supply chain issues and rising material costs
4.3 Opportunities
4.3.1 Technological Innovations
4.4 Value Chain / Supply Chain Analysis
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Bargaining Power of Suppliers
4.5.2 Bargaining Power of Buyers/Consumers
4.5.3 Threat of New Entrants
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
5. MARKET INSIGHTS
5.1 Current Economic Scenario and Consumer Sentiment
5.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights
5.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector
5.4 Insights into Existing and Upcoming Projects
5.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending
5.6 Insights into Rental Yields in the Commercial Real Estate Segment
5.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate
5.8 Insights into Public-Private Partnerships in Commercial Real Estate
5.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, Property Management)
5.10 Impact of COVID-19 on the Market
6. MARKET SEGMENTATION
6.1 By Type
6.1.1 Office
6.1.2 Retail
6.1.3 Industrial and Logistics
6.1.4 Hospitality
6.1.5 Other Types
6.2 By City
6.2.1 Sydney
6.2.2 Melbourne
6.2.3 Brisbane
6.2.4 Adelaide
6.2.5 Canberra
6.2.6 Perth
7. COMPETITIVE LANDSCAPE
7.1 Overview (Market Concentration and Major Players)
7.2 Company Profiles
7.2.1 Lendlease Corporation
7.2.2 Scentre Group Limited
7.2.3 Mirvac
7.2.4 Pact Construction
7.2.5 Multiplex Constructions Pty Ltd.
7.2.6 Meriton Apartments Pty Ltd.
7.2.7 Stockland
7.2.8 Frasers Property
7.2.9 Pellicano Builders
7.2.10 Qube Property Group Pty Ltd*
- *List Not Exhaustive
7.3 Other Companies
8. FUTURE OF THE MARKET
9. APPENDIX
Australia Commercial Real Estate Industry Segmentation
Commercial real estate (CRE) is a property used exclusively for business or workplace purposes or to generate cash flow in some way for the owner or lessee.
Australia's commercial real estate market is segmented by type (office, retail, industrial and logistics, hospitality, and others) and by key cities (Sydney, Melbourne, Brisbane, Adelaide, Canberra, and Perth).
The report offers market size and forecasts for the Australian commercial real estate market in terms of value (USD) for all the above segments.
| By Type | |
| Office | |
| Retail | |
| Industrial and Logistics | |
| Hospitality | |
| Other Types |
| By City | |
| Sydney | |
| Melbourne | |
| Brisbane | |
| Adelaide | |
| Canberra | |
| Perth |
Australia Commercial Real Estate Market Research Faqs
How big is the Australia Commercial Real Estate Market?
The Australia Commercial Real Estate Market size is expected to reach USD 34.07 billion in 2024 and grow at a CAGR of 8.46% to reach USD 51.14 billion by 2029.
What is the current Australia Commercial Real Estate Market size?
In 2024, the Australia Commercial Real Estate Market size is expected to reach USD 34.07 billion.
Who are the key players in Australia Commercial Real Estate Market?
Lendlease Corporation, Scentre Group Limited, Mirvac, Pact Construction and Multiplex Constructions PTY Ltd are the major companies operating in the Australia Commercial Real Estate Market.
What years does this Australia Commercial Real Estate Market cover, and what was the market size in 2023?
In 2023, the Australia Commercial Real Estate Market size was estimated at USD 31.19 billion. The report covers the Australia Commercial Real Estate Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the Australia Commercial Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Australia Commercial Real Estate Industry Report
Statistics for the 2024 Australia Commercial Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Australia Commercial Real Estate analysis includes a market forecast outlook to for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
Australia Commercial Real Estate Market Report Snapshots
