In a standout year for Australia’s commercial real estate, retail property emerged as the clear outperformer, buoyed by strong investor demand and favourable market dynamics.

A Remarkable 19.2% Boost in Transactions

The 2024/25 financial year saw retail property transactions surge by 19.2%, marking retail as the surprise leader in commercial asset classes. Total commercial activity rose to $59.9 billion across 7,754 deals, although the number of transactions actually fell 18.5% compared with the previous year—indicating a shift toward larger, high-value sales.

Breakdown of the Commercial Market

Industrial properties remained the largest sector by volume at $19.0 billion (31.6% of activity), but retail delivered the strongest growth, making up 24.3% of the market with $14.6 billion in deals.

What’s Driving the Retail Renaissance

Several factors supported the sector’s resurgence:

• Tight supply of new developments

• Strong population growth

• Innovative retail formats responding to shifting consumer behaviour

• Private investors targeting smaller neighbourhood, sub-regional, and strip retail assets under $20 million

Other Sectors: Industrial, Office, and Development

Industrial maintained its dominance in warehousing, logistics, and data centres, though volumes slipped by 1.6% year on year. Office assets recorded a modest 2.1% gain, totalling $12.5 billion, but challenges such as high vacancies and hybrid working remain. Development sites were weaker, falling 15.8% to $9.4 billion.

What Lies Ahead: Cautious Optimism

The second half of 2024/25 brought modest interest rate cuts, restoring some market momentum. If this trend continues into 2025/26, both retail and industrial sectors may gain further strength. Knight Frank research highlights that retail sales climbed 3.6% in the year to February 2025, with further growth expected. Investment in retail assets reached $9.9 billion in 2024, 39% higher than the year before, and is forecast to at least match that figure in 2025, particularly in New South Wales and Queensland. With easing inflation and wage growth providing tailwinds, investor confidence is expected to continue improving.

Reference
Based on the article “Retail property has a standout 12 months” published by Elite Agent on July 22, 2025.

Disclaimer
This post is for general informational purposes and does not constitute property, financial, or investment advice. Market conditions vary and individual circumstances are unique. Please seek independent expert advice before making investment decisions.