Director Tas Costi shares key market insights as institutional capital returns to high-performing sectors like non-discretionary retail and industrial assets. Alternative assets remain strong, while owner-occupiers are increasingly buying over leasing. However, office assets in low-growth areas and unsecured regional investments pose risks. In 2025, strategic acquisitions and a focus on quality assets will be key to maximizing returns.
- Non-Discretionary Retail Will See Strong Growth
“Non-discretionary retail assets, particularly those leased to major tenants like Woolworths, Coles, and Aldi, continue to attract strong investor interest. Institutional buyers are returning to this space, reinforcing stability and long-term value. Sub-regional and metropolitan retail assets are expected to experience significant appreciation, driven by strong demand and limited supply in key locations.”
- Alternative Assets Gaining Momentum
“Medical, childcare, service stations, and fast food assets remain in focus as they offer long-term leases with national tenants and reliable income streams. Population growth, government support, and evolving consumer needs continue to drive demand in these sectors, ensuring continued value growth throughout the year.”
- Industrial Sector to Remain a Top Performer
“Industrial assets, particularly warehousing, logistics, and manufacturing facilities, are seeing continued demand from both institutional and private investors. E-commerce expansion, supply chain shifts, and automation are fueling demand for well-located industrial properties. With low vacancy rates and strong rental growth, this sector is expected to deliver capital appreciation and solid rental yields.”
- Office Assets in Low-Growth Areas Remain Risky
“Office assets in low-growth or remote areas continue to face headwinds. High vacancy rates, weak tenant demand, and shifting workplace trends make these investments increasingly uncertain. Investors should be cautious and focus on quality office assets in prime locations with strong lease covenants.”
- Investing in Regional or Remote Areas Requires Secure Lease Structures
“Investors considering regional or remote assets should prioritize secure lease structures with long-term agreements (10+ years) and financial security measures such as bank guarantees or bonds. While some regional assets offer attractive yields, many lack strong tenants or long-term security, increasing risk. Ensuring lease stability and financial protections is key to making remote investments viable.”
- Institutional Investors Leading Market Trends
“Institutional capital is flowing back into quality commercial assets, signalling strong market confidence. Sectors like industrial, non-discretionary retail, and alternative assets are seeing increased activity, setting the benchmark for private investors. As interest rates stabilize, we expect a rise in transaction volumes and strong competition for prime assets, making it a key year for strategic acquisitions.”
- Owner-Occupiers Returning as Buying Becomes More Viable
“If interest rates start falling again, buying will become more cost-effective than renting, particularly in the industrial and retail sectors. Rising rents and increased lending confidence will encourage more businesses to purchase their own premises rather than lease, driving demand in these markets.”
- Gradual Increase in Development Site Acquisitions
“We expect to see a rise in development site acquisitions, but not a significant surge. Construction costs are stabilizing, vendor expectations are adjusting, and reputable, well-capitalized developers need to keep projects moving, which will drive steady but measured activity in this space.”
As a leading commercial buyer’s agency, Costi Cohen helps investors acquire premium properties in key markets nationwide. Contact us today to find out how we can support your investment goals on [email protected] or 02 8934 3414.
