Commercial Property Outlook

THERE HAS BEEN much talk about Commercial Property emerging post-Covid. So, let’s quickly explore just how things are likely to unfold.

Industrial Property

This covers medium to large warehouses and factories designed to manufacture and store goods. And they have been the main beneficiary of the online shopping boom.

There has been a big shift to e-commerce during the lockdowns. This has seen a surge in demand for logistics space and warehouses – to allow a stockpiling of inventory, and avoid any supply shortages.

As such, there has been a significant rental and capital growth in most industrial markets around Australia. Although rising prices have driven down yields to an all-time low.

And that begs the question as to whether industrial landlords will continue to receive ongoing rental growth, sufficient to justify their increased valuations.


Most major employers are predicting a hybrid office-home arrangement – to replace the traditional 5-day office week. The consensus is that employees will end up working 2 to 3 days a week from home.

Interestingly, the Productivity Commission suggests the benefits include:

  • less time spent commuting;
  • greater autonomy and flexibility;
  • less spent on office space; and
  • access to a wider pool of talent for recruitment.

More flexible working environments may result in less demand for CBD office space. But that should be offset by the need for more space – to satisfy the likely introduction of new social distancing rules.

However, there will be strong demand for suburban offices – aimed at reducing commute time, and boosting attendance.


Even though this sector remains fragile, it bounced back from a collapse in early 2020 … as Covid restrictions were eased, and consumers flooded back to the nation’s shopping malls – particularly in Victoria.

However, after a 5th lockdown, analysis shows Victorians are more likely to shop online for anything from fashion and homewares to electronics.

Bottom Line: Each sector, and even segments within each sector … are likely to bounce back at differing rates.

But overall, consumers and the economy are expected to “play catch up” once again – as they emerge from their enforced hibernation.


  1. Clive Stone says

    Certainly my employer and many other large resources businesses here have seen how work could be done effectively by many office based personnel during COVID lockdowns and have made working from home some days of the week an option which many are embracing.

    While great for many employees, for example it saves me 6hrs of commute time per week, the impact on small cafes, food outlets and other retailers who rely on our foot traffic will be telling and potentially contribute to further hollowing out of the CBD.

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