Australia’s commercial property market is entering the final quarter of 2026 with another change in the interest rate environment, after the Reserve Bank of Australia increased the cash rate by 25 basis points to 4.60% this week.
The decision takes the cash rate to its highest level in around 15 years and will inevitably place greater focus on borrowing costs, yields and property values.
What does this mean for commercial property?
Higher interest rates generally increase the cost of funding commercial property acquisitions. For investors, this can mean greater scrutiny of yields, lease security, tenant quality and the potential for rental growth.
For owner-occupiers, borrowing capacity and repayments will also become increasingly important when comparing the cost of purchasing premises against continuing to lease.
However, higher rates don’t necessarily mean activity stops.
Instead, we are likely to see a more selective commercial property market, where buyers focus heavily on location, income security and the underlying fundamentals of an asset.
Southeast Queensland continues to show strength
Despite higher borrowing costs, recent activity indicates continued confidence in Brisbane and Southeast Queensland.
Brisbane’s industrial sector remains particularly tight. Recent Property Council research found Brisbane’s Industrial Outdoor Storage market is approximately 96.9% utilised, while Greater Brisbane could exhaust its existing industrial land supply within the next five years if current absorption continues.
Prime industrial rents have also increased significantly since 2019, reflecting continued competition for well-located industrial and logistics property.
The Brisbane CBD is also attracting investment.
Funds manager Quintessential recently acquired 133 Mary Street for $81.8 million, with the buyer identifying Brisbane’s limited new office supply, tenant demand and long-term growth as key attractions.
Meanwhile, significant Brisbane sites continue to reach the market, including Channel Nine’s long held 25,411sqm Mount Coo-tha headquarters, presenting another major repositioning and redevelopment opportunity.
What should owners and investors be watching?
The latest rate increase reinforces the importance of understanding the fundamentals behind every commercial property decision.
Location, lease structure, tenant covenant, rental growth, future supply and development potential will increasingly influence buyer demand and pricing.
For vendors, realistic pricing and a clear strategy will be important in attracting buyers who now have higher financing costs to consider.
For buyers, changing conditions may also create opportunities. Assets requiring repositioning, leasing or active management may offer value for investors prepared to look beyond headline yields.
Southeast Queensland continues to benefit from population growth, infrastructure investment and constrained supply across several commercial property sectors.
The market may be becoming more disciplined, but quality commercial property in the right location remains firmly on investors’ radar.
Thinking of selling, leasing or purchasing commercial property? Contact the My Agent Aus team to discuss current market conditions and opportunities across Brisbane and Southeast Queensland.
This article is general information only and does not constitute financial, investment or property advice.