For 12 years I've been making the case that Australian investors should look seriously at commercial property. This quarter, that case stopped being a conversation and became a transaction.
Here's my read on where sentiment sits, what the data is saying and how I'd position for the quarter ahead, written after the RBA lifted the cash rate to 4.60%.
Overall sentiment: A split market
There's genuine confidence in commercial property among investors who need higher yields. Residential investors remain cautious and are mostly concentrated around the entry points of the market.
In commercial, last quarter investors were curious. This quarter they're moving.
We're seeing more first-time commercial buyers than at any point since we launched Rethink Investing. At the same time, high net worth buyers and fund managers are starting to acquire larger deals.
These are not speculative buyers chasing a trend. They're investors who have run the numbers and made a rational decision that income is the play right now, via higher net yield assets. That's a fundamentally different type of buyer from what drives a hype cycle.
Data and trends
The number that tells the whole story is this: retail commercial property delivered total returns of 7.3% in Q3 2025.
The mainstream narrative had written retail off as structurally impaired post-pandemic. The data said otherwise six consecutive quarters ago, and the market is only now catching up to what the fundamentals were telling us.
That surprised almost nobody at Rethink Group, because we were transacting in retail through the entire period the commentators were calling it dead.
National industrial vacancy sits at 3.2%. That's not a market with a supply problem. It's a market with a demand problem for any investor not already in it.
Brisbane industrial yields compressed 19 basis points year on year. Perth compressed 37. These are not small moves. That's capital repricing in real time. Investors already in those markets are watching their assets revalue upward, while those still waiting for certainty are watching the entry point close.
Separating noise from reality
The noise right now is interest rates, and September’s hike will only amplify it. Every mainstream conversation frames the property market around what the RBA does next.
My clients aren't making decisions based on what the RBA does next. They're making decisions based on what a specific asset produces in net income relative to what it costs to hold. That calculation either works or it doesn't, regardless of whether the cash rate moves 25 basis points in either direction.
Most investors want to hold for 10 years or more, so what rates do in the next few months is negligible in the grand scheme of things.
The other gap I see constantly is between what investors say they want and what they actually do. They say they want cash flow. Then they buy a Sydney apartment yielding 2% net because it feels safer.
Familiarity bias in residential remains the single biggest obstacle between most Australian investors and the outcome they say they're trying to achieve.
Practical takeaways for next quarter
Stop waiting for the perfect entry point. It doesn't exist, and by the time you're certain, the market has already moved. The investors I've watched build genuine wealth in commercial property over the past decade weren't the ones who timed it perfectly. They bought quality assets at reasonable yields and held them through every cycle that followed.
Run the honest net yield. If you're still entirely in residential, calculate the net yield on your portfolio today after every outgoing, not the gross. Then compare that number with what you'd receive from a quality commercial asset at a 6% net yield. For most investors right now, that comparison is the only data point that matters.
Follow the yield gap. Queensland, Western Australia, South Australia and Victoria are still producing entry yields materially above Sydney and the other major NSW regional centres. I wouldn’t be surprised if that gap narrows materially over the next 24 months.
Budget 2026: Structural, not cyclical
The 2026 budget changed the residential investment equation structurally, not cyclically. Most investors are still processing it as a cyclical event and waiting for conditions to normalise. They won't normalise.
The policy has shifted the playing field. Investors who recognise a structural change rather than a temporary headwind, and position accordingly, will look back on this period as the moment everything changed for them.
Confidence over hype means backing the numbers when the narrative is still catching up. The numbers in commercial property right now are about as clear as I've seen them in 12 years of doing this.
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