Increasingly scarce options to move into new developments and high demand to buy and lease existing assets will be a focus in 2026

Acting quickly on increasingly scarce options to move into new developments will grow in importance for occupiers and investors in 2026 while demand to lease and buy existing assets is expected to accelerate because ‘There Is No Alternative’ (TINA).

TINA is the theme of CBRE’s 2026 Pacific Market Outlook report. The acronym is often used in financial markets in reference to equities, but it has relevance for the property market amid ongoing supply restraints.

CBRE’s Head of Pacific Research Sameer Chopra said, “New supply is set to undershoot historical levels by 20% to 50% for the rest of the decade. With reduced property choice, the alternatives for investors and renters are increasingly limited.”

“We see demand to lease and buy accelerating into the next best, and only, option. In tandem, income yield contribution will start to dominate total returns, except in the residential sector,” Mr Chopra added.

CBRE Research expects the strongest outperformance from offices in Brisbane and Canberra; industrial in Adelaide and Brisbane; shopping centres in Sydney and Melbourne; and apartments in Gold Coast and Perth.

CBRE’s Head of Office and Capital Markets Research Tom Broderick noted that the forecast total returns over the next three years for office assets would be significantly above historical levels, led by the Brisbane and Canberra CBDs.

“Momentum is continuing to build in the Australian office market moving into 2026. The significantly lower supply outlook is driving improved rent growth across the country. Investors are also starting to respond to valuations reaching their trough across all markets,” Mr Broderick said.

“We estimate economic rents for premium offices have increased by over 60% between 2020 to 2025. 

For 2026, we forecast net effective rent growth for Brisbane CBD +7.3% and Sydney CBD +6.6% while in Melbourne, we’re expecting recovery from 2027 onwards,” he added.

Other forecasts in the report include:

• Premium assets and assets close to emerging infrastructure (metro, airport, defence) should prove more defensive from risks associated with technology disruption.

   

• Investors will buy existing assets as replacement costs are high, and rents could take up to a decade to catch up.
  
  
• Transaction volumes should grow in 2026, rising by ~5% to 10%, with faster growth in office. Over 2026 to 2028, CBRE expects cap rates to tighten by 25bps to 40bps depending upon asset class.
  
  
• With the exception of assets located in premium precincts, CBRE expects net effective rents to grow by low single digits. Leasing activity is likely to pick up through 2026, in response to attractive incentives and a supply shortfall.