Australia’s industrial investment market to surpass office space by 2026

An influx in logistics deals will help the value of commercial real estate transactions in Australia is on return to pre-COVID levels this year

The Australian commercial real estate industry is predicted to grow at a CAGR of 5.6 percent between 2022 and 2027, according to data provided by Mordor Intelligence.

The pandemic brought considerable uncertainty and disruption to the property sector, with employees opting to work flexibly, which increased customer demand for e-commerce. This caused a market disruption and generated several opportunities for investors, landlords, and occupiers.

Low borrowing rates, continued government support, and a population emerging from pandemic-induced lockdowns cashed up and eager to spend marked a new era for commercial real estate in Australia in 2022.

The market forecast for commercial real estate investors appears favourable, backed by low-cost finance, structural improvements, and under-allocation to real assets.

Due to rising logistics real estate values and the completion of new supersized facilities to cater to the expansion of e-commerce, the total value of investment-grade industrial property in Australia is anticipated to surpass the office sector for the first time in 2026, Commercial Real Estate reports.

According to CBRE Research, the Australian industrial and logistics market is expected to grow by 48 percent between now and 2026, from AUD286 billion to AUD424 billion.

More: Australia’s commercial property sector expected to flourish in 2022

An influx in logistics deals will help the value of commercial real estate transactions in Australia is on return to pre-COVID levels this year.

An estimated capital of USD50 billion aiming to ride the logistics boom laid the groundwork for a strong rebound in 2021, as did high demand for other income-generating real estate asset classes.

Industrial and logistics sales increased to USD13 billion, which more than doubled full-year 2020 volumes of USD5.3 billion, thanks to ESR’s record-breaking USD3.8 billion acquisition of the Milestone logistics portfolio.

Despite many malls currently struggling as a result of the rise of e-commerce and lockdown limitations, retail investment activity has increased.

The Property Report editors wrote this article. For more information, email: [email protected].