Commercial property yields delivered a mixed performance over the June 2026 quarter, with market movements varying significantly across asset classes and geographic locations, according to the latest realcommercial.com.au Commercial Yield Report.
While overall transaction activity picked up across Australia, market momentum continues to be constrained by elevated interest rates, which remain a key friction point for buyer demand.
However, the commercial sector is eyeing a potential structural boost following recent federal budget tax reforms, according REA Group Senior Economist and report author, Anne Flaherty.
“One tailwind for the sector has been the sweeping tax changes brought in following the Federal Budget, which retained negative benefits for commercial property investment, while removing them for residential.
“Over time, this could translate into increased demand for commercial property, particularly once funding costs are in less restrictive territory.”
Industrial property maintained its standing as the market’s safest haven, with gross yields holding relatively stable over the quarter following modest compression across most major cities.
Industrial yields were relatively stable over the June quarter, with only modest compression recorded across most markets. Industrial is the only property type where yields are sitting lower in every capital city compared to 12 months ago, reflecting ongoing demand for the sector.
The report revealed Western Australia and Queensland led the annual tightening, with industrial yields in Perth compressing by 37 basis points, Brisbane by 19 basis points (bp), and Adelaide by 17bp year-on-year.
Sydney and Melbourne industrial yields currently sit at the tightest in the country at 4.2% gross.
The office sector showcased the greatest divergence in performance nationwide, with gross yields sharpening over the quarter in Brisbane (-22bp), Adelaide (-10bp), and Sydney (-1bp), but softening in Melbourne (+6bp) and Perth (+17bp).
Meanwhile, retail property experienced notable national yield compression through June, spearheaded by sharp quarterly drops in Brisbane (-25bp), Adelaide (-18bp), and Melbourne (-10bp), while Sydney and Perth held flat.
“Retail yields remain notably higher than office and industrial yields in every capital city, indicative of the higher perceived risk in the sector.”
For your investors seeking higher headline returns, Queensland continues to lead the pack, with Brisbane offering the highest yields across industrial (5.2%), office (6.8%), and retail property (7.9%) among all capital cities.