Article | Intelligent Investment
Office, Industrial and Retail: What's behind the standout growth in investment volumes
CBRE’s leading experts identify why investment volume growth is occurring across office, industrial and retail property in 2025.
March 12, 2025
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Recovery is a theme that’s expected to make a notable impact on key property sectors in 2025.
This forecast comes from CBRE’s latest Pacific Market Outlook report which highlights:
“Stabilising bond yields and potential for rate cuts has started to improve transaction market outlook,” explains Sameer Chopra, CBRE’s Pacific Head of Research.
In 2025, CBRE’s research experts forecasted volume growth of 25% in office, 10% in industrial and 10% in retail.
“Gearing in the commercial real estate industry is below 30%, so we're unlikely to see forced selling. Instead, sellers are likely to be motivated by needing funds for development pipelines and fine-tuning portfolio allocations,” says Sameer.
When it comes to providing the most effective insights to help optimise real estate investment strategies, CBRE’s sector experts on the ground have the latest insights.
“Approximately 40% of the national volume comprised of eight prime-grade buildings, six of which were located in the Sydney CBD core,” says James Parry, CBRE’s Pacific Head of Capital Markets, Office.
“The buyers of these eight properties were predominantly international, but domestic capital is also becoming increasingly active.”
Book values in 2025 have been written down to levels that are more attractive to buyers, a move which is leading industry experts like James to expect a more active year, particularly in terms of the number of trades.
“This is driven by a positive spread between yields and the cost of debt, with debt finally moving in the right direction and already reflected in the three-year fixed rate.
“Overall, we believe the improved conditions are more favourable for owners to implement planned divestments.”
Chris O’Brien, Executive Director of CBRE’S Industrial & Logistics, Capital Markets division, says that the demand for high-quality assets in core locations will remain very strong, particularly in Sydney and Brisbane.
“From an investment perspective, a focus back to Tier 1 tenant strength and lease tenure is being experienced. Transaction volume level in Melbourne is expected to remain low, whilst the market adjusts for the Foreign Owners Land Tax implications.
“Rental growth will slow in some regions, however across Australia we are still experiencing low vacancy on a global scale. In select markets, occupiers are leveraging rising incentives, capitalising on an increase in leasing activity.”
“Despite cost-of-living pressures, the pandemic and sticky interest rates, retail sales and foot traffic have remained buoyant. Furthermore, limited new regional and subregional supply will be delivered over the next three years. This will help drive sales densities in existing centres and support rent growth, making the retail sector attractive for investors.”
This observation is supported by the latest Market Outlook data indicating the country’s shopping centre occupancy range at 95% while the range of vacancy in CBD shops across Australian cities spans between 6% to 25%. The latter’s range is expected to tighten off the back of low new supply and a stronger retail environment.
This forecast comes from CBRE’s latest Pacific Market Outlook report which highlights:
- 15%-plus growth in investment volumes in 2025 to the tune of circa-$36 billion
- 23%-plus growth in investment volumes in 2026 to the tune of circa-$44 billion
“Stabilising bond yields and potential for rate cuts has started to improve transaction market outlook,” explains Sameer Chopra, CBRE’s Pacific Head of Research.
In 2025, CBRE’s research experts forecasted volume growth of 25% in office, 10% in industrial and 10% in retail.
“Gearing in the commercial real estate industry is below 30%, so we're unlikely to see forced selling. Instead, sellers are likely to be motivated by needing funds for development pipelines and fine-tuning portfolio allocations,” says Sameer.
When it comes to providing the most effective insights to help optimise real estate investment strategies, CBRE’s sector experts on the ground have the latest insights.
Office activity on the rise
Office volumes recovered in 2024, albeit from record low levels.“Approximately 40% of the national volume comprised of eight prime-grade buildings, six of which were located in the Sydney CBD core,” says James Parry, CBRE’s Pacific Head of Capital Markets, Office.
“The buyers of these eight properties were predominantly international, but domestic capital is also becoming increasingly active.”
Book values in 2025 have been written down to levels that are more attractive to buyers, a move which is leading industry experts like James to expect a more active year, particularly in terms of the number of trades.
“This is driven by a positive spread between yields and the cost of debt, with debt finally moving in the right direction and already reflected in the three-year fixed rate.
“Overall, we believe the improved conditions are more favourable for owners to implement planned divestments.”
Industrial showing strength in two cities
Australia currently needs 6.2 million square metres of new floorspace to accommodate an industrial and logistics sector buoyed by population growth over the next four years.Chris O’Brien, Executive Director of CBRE’S Industrial & Logistics, Capital Markets division, says that the demand for high-quality assets in core locations will remain very strong, particularly in Sydney and Brisbane.
“From an investment perspective, a focus back to Tier 1 tenant strength and lease tenure is being experienced. Transaction volume level in Melbourne is expected to remain low, whilst the market adjusts for the Foreign Owners Land Tax implications.
“Rental growth will slow in some regions, however across Australia we are still experiencing low vacancy on a global scale. In select markets, occupiers are leveraging rising incentives, capitalising on an increase in leasing activity.”
Retail sales remain buoyant
In Australia, the retail market size is valued at approximately $400 billion. CBRE’s Head of Retail and Alternatives Research, Kate Bailey, says that the retail sector has continued to show resilience, which is driving an increase in demand from investors.“Despite cost-of-living pressures, the pandemic and sticky interest rates, retail sales and foot traffic have remained buoyant. Furthermore, limited new regional and subregional supply will be delivered over the next three years. This will help drive sales densities in existing centres and support rent growth, making the retail sector attractive for investors.”
This observation is supported by the latest Market Outlook data indicating the country’s shopping centre occupancy range at 95% while the range of vacancy in CBD shops across Australian cities spans between 6% to 25%. The latter’s range is expected to tighten off the back of low new supply and a stronger retail environment.