Head of Research Vanessa Rader and Capital Transactions Director Ian Hetherington unpacked the 2024/2025 financial year and explored where the opportunities lie in the commercial property market.
With more than three decades in the industry, Ian Hetherington didn’t shy away from the hard truths facing the sector, while Vanessa Rader grounded the discussion in detailed transaction data and a broader economic view.
Vanessa opened the discussion with a review of the year’s preliminary transaction data, which shows approximately $56 billion in commercial sales over FY2024.
“While that sounds large, last year we were over $60 billion - and even higher the year before that,” she said. “There was a spark of optimism late last year, but it hasn’t quite carried through the way we expected.”
That sluggishness, Ian explained, can be partly attributed to investor sentiment.
“When investors are anxious, they tend to sit on their hands,” he said. “There’s a lot of uncertainty in the world right now - conflict, global leadership transitions, and general economic unease. It’s not an easy space to have a high level of conviction in.”
Still, both agreed that interest rate shifts could help unlock movement.
“If rates come down, they'll come down because there’s concern,” Ian said. “But lower rates mean cheaper debt, and historically, that drives yields down too.”
Office: Challenge or opportunity?
A large portion of the discussion focused on the much-scrutinised office market, which Vanessa noted has endured sustained pressure.
“Return-to-office metrics remain weak in some states - Melbourne in particular has been the slowest and hardest to watch,” she said.
Ian offered an optimistic overview. “There’s definitely a shift - people are beginning to accept this new normal,” he said. “Once the core CBDs fill up, we’ll see the fringe markets follow. Right now, I think the best investment opportunities lie in low A-grade or B-grade office stock in CBDs.”
Vanessa added that tenant needs have also changed post-pandemic, with many businesses shrinking their office footprint to allow for hot-desking and hybrid work.
Ian noted: “I’m still surprised the desire for your own desk hasn’t returned in force. But fear - especially around job security - could be part of what’s bringing people back.”
Industrial still in high demand
On the industrial front, Vanessa raised concerns about a lack of available land. Ian agreed, noting the strength of institutional demand.
“Industrial is here to stay,” he said. “Yes, warehousing demand can dip if the economy slows, but the overall market remains resilient. Yields will tighten in the short to medium term, and urban renewal is absorbing what’s left of inner-ring industrial land. It’s pushing development further out.”
Retail shines bright
Ian championed the retail sector as a “shining light” of the year.
“I’ve been talking up retail for the last 12 months, and it’s proving itself,” Vanessa said.
Ian concurred: “Retail yields have been retracting for a long time. People are often too binary in their thinking - retail isn’t dying; it’s evolving. Fewer new shopping centres are being built, but the ones that exist are adapting - we’re seeing elevated food, media, and experiential offerings that keep them relevant.”
Vanessa added, “Just look at Tokyo - their centres are dynamic, social, and multi-layered. It’s an exciting benchmark for what could evolve here.”
Where are the opportunities?
As the webinar wrapped, Vanessa posed the critical question: where are the biggest opportunities today?
Ian said “Office is the contrarian play, but the value is there. If I had to invest before Christmas, I’d be looking at low A or B-grade Sydney CBD assets, or something in Brisbane with 3-4 years WALE and a solid NABERS rating.”
In a market where uncertainty is abundant, the key message from the webinar was clear, while the financial year may have been muted, there are still opportunities to be found for the informed, the flexible, and the brave.
WATCH THE FULL WEBINAR HERE
