Tas Costi has released his outlook on where capital is likely to flow in 2026. He highlights nondiscretionary retail, medical and well located industrial as the strongest opportunities for Australian investors including experienced mum and dad buyers stepping up from residential.
“In 2026 the strongest opportunities will be in assets that serve real daily needs such as supermarkets medical and functional industrial in premium locations. We’re focused on quality tenants, solid covenants and assets with genuine rental growth, not speculative stories.”
1. Nondiscretionary Retail
Tas expects nondiscretionary retail to remain a core performer.
This includes:
• Supermarket anchored neighbourhood centres
• Convenience centres with chemists GPs allied health and food
• Strong suburban strip retail in established inner and middle ring locations
“Non discretionary retail including groceries pharmacy medical and everyday services has proven resilient through interest rate cycles and online disruption. When combined with CPI linked or fixed annual increases you can build reliable income streams.”
Key characteristics:
• Strong anchor covenants
• Growing trade areas with limited competing stock
• Centres that can shift further toward medical food and service uses
2. Medical and Health
Medical remains a key conviction theme for 2026 supported by demographic trends and structural demand.
Assets include:
• GP clinics and integrated medical centres
• Dental imaging pathology and allied health
• Specialist and day hospital style facilities
“Medical is one of the most defensive income streams in the market. Operators spend heavily on fitouts and become sticky tenants. This often translates to longer WALE and lower vacancy risk.”
Tas is prioritising:
• Long term leases to established operators
• Proximity to hospitals or health precincts
• Buildings with suitable parking access and services
3. Industrial
Tas is leaning into shorter WALE industrial assets in strong locations to capture rental reversion.
The focus is on:
• Modern tilt panel warehouses in inner and middle ring precincts
• Small and mid size units for trades storage and last mile logistics
• Multi tenanted estates in Sydney Melbourne Brisbane and key growth areas
“We target industrial assets where passing rent is clearly below market. A lease expiry is not a risk. It is an opportunity to reset rent to market and adjust income.”
Key elements:
• Infill locations with limited land supply
• WALE in the two to five year range
• Functional improvements tenants pay for
4. Build to Rent and Mixed Use Land with Income
“We look for assets where investors are effectively paid to hold strategic land. Current income may come from retail office or medical but underlying zoning supports a future BTR or mixed use play.”
Key considerations:
• Holding income with clear planning pathways
• Land as the core long term value driver
• Avoid speculative assumptions many years away
5. Convenience Fuel and Roadside Convenience
Tas continues to see opportunities in service stations and roadside convenience where land and traffic fundamentals are strong.
This includes:
• Service stations on major arterials and corner sites
• Roadside centres with fuel QSR and convenience retail
“Well located fuel and convenience sites rely on land and traffic fundamentals. The right zoning exposure and tenant mix can make these attractive long term holds subject to environmental considerations.”
6. Select High Quality Office Only
Office remains a two speed market. Tas is highly selective.
“We are not chasing secondary CBD towers. Value exists in well located amenity rich assets below replacement cost with a clear leasing or repositioning strategy.”
What to Avoid
For 2026, Tas is urging investors – especially those transitioning from residential into commercial, to be cautious around:
- Secondary CBD office with high capex and soft demand
• Discretionary fashion heavy centres with weak foot traffic
• Specialised single user facilities with limited alternate use
“The biggest mistake we see mum-and-dad investors make is paying institutional-level pricing for assets that don’t have institutional-grade tenants, locations or demand,” Tas says.
Disclaimer: The information in this article is provided for general informational purposes only and does not constitute financial, investment or property advice. Readers should seek independent professional, legal and taxation advice before making investment decisions or acting on yield, duty or return calculations. Market conditions and forecasts may change without notice.