Industrial and logistics assets remain the income backbone of Australian commercial property. Vacancy has lifted from the ultra-tight lows of recent years as new facilities across the east coast are steadily absorbed.

This represents a healthy rebalancing rather than a structural shift. Core demand drivers: e-commerce adoption, supply-chain resilience, onshoring in key manufacturing segments, and population growth, remain firmly intact.

Prime, well-located estates in Sydney’s West, Melbourne’s established industrial corridors, and land-constrained markets such as Adelaide and Perth should continue to deliver dependable income with modest real rental growth. But leasing activity is steadily more selective: large tenants are cautious on major relocations.

Industrial property remains a core long-term allocation, but investors must now differentiate more carefully across geography, incentives and asset quality. It is a sector where repositioning to quality is the focus.

Australia’s office sector is in transition rather than terminal decline. Headline CBD vacancy sits at multi-decade highs, a consequence of new supply and persistent hybrid-work patterns.

Yet beneath this aggregate, demand is clearly bifurcating; premium assets in Sydney and Brisbane are showing positive net absorption, falling incentives and, in several cases, double-digit effective rental growth. By contrast, older, poorly located B and C-grade stock (particularly in Melbourne and Perth) is absorbing the brunt of tenant downsizing and consolidation.

For investors, this divergence heightens the importance of selectivity. Value is emerging where assets offer the right mix of amenity, ESG credentials and floorplate efficiency.

However, secondary towers without a credible repositioning or conversion path face the risk of obsolescence. This is accentuated for the Melbourne CBD office market.

Australia’s retail property sector is undergoing a meaningful re-rating as fundamentals strengthen across income, demand and capital flows. After several years in the “too hard” basket, household income growth and resilient spending have surprised to the upside. This is flowing directly into retail sales, with food, essentials and importantly, early signs of a discretionary recovery led by younger consumers.

Strong buyer demand is now compressing yields, particularly in regional, neighbourhood and large-format centres where investors are competing for scale and secure cashflows.

Limited new development is reinforcing this shift, tightening the supply–demand balance and strengthening landlords’ negotiating power with supermarkets and mini-majors.

Overall, retail has re-emerged as one of Australia’s most resilient and investable property sectors, offering a mix of high initial yields, improving growth prospects and deepening capital liquidity.

Data centres sit at the intersection of property, infrastructure and technology. Australia’s installed capacity has expanded rapidly, yet vacancy has fallen in major markets to mid-single digits as cloud providers, corporates and government agencies scramble for power and space.

Data centres offer infrastructure-like cashflows with meaningful growth optionality, balanced against high capital intensity and the need for specialist operating partners. We have a modest exposure to data centres within our strategy but have some concern as to the sustainability of returns to the capital intensity.

After two years of valuation decline and earnings pressure, the listed property sector is moving into a more constructive phase. Industrial and retail offer the clearest paths to income resilience and growth. Office remains the most challenged and demands selectivity. With attractive yields and easing rate pressures, quality backed portfolios are well positioned for the next phase of the cycle.

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