Investing in Commercial Property in Australia in 2026

Commercial property pays more rent per dollar invested than housing, the tenant usually covers the outgoings, and leases run for years rather than months. It also demands far more cash up front, and the finance behind it works nothing like a home loan. Both halves of that matter before you start looking.

This is a guide to the buying and borrowing side, written from the lending end rather than the agency end.

What the numbers look like in 2026

The market has split sharply by asset type, and that split is now the main thing driving what a lender will fund.

Industrial is the strongest class. National vacancy sat at roughly 3.2% to 3.7% through the middle of 2026 — below the long-run equilibrium — with Perth tightest at around 1% to 2%. Lenders know it, which is why warehouse and industrial security attracts the highest limits on offer.

Office is the weakest. National office vacancy reached 16.1% in January 2026, the highest in about 31 years. The average hides a wide gap: premium grade improved to 10.2% while non-CBD stock sat at 18.9%. Prime CBD yields in the first quarter of 2026 ran from 5.70% in Sydney to 7.58% in Perth, with Melbourne 6.89% and Brisbane 7.25%.

The practical consequence is that a secondary-grade office suite and a warehouse of the same value are not the same deal to a lender, and will not be offered the same loan.

Want to test a deal? Put the price and rent into our commercial loan calculator. It shows the cash you need on settlement day, the repayment before and after interest only ends, and how many times the rent covers the interest.

The cash you actually need

There is no lenders mortgage insurance in commercial lending. The loan-to-value limit is absolute, and it moves with the asset.

• Industrial and warehouse — 70% to 80%.
• Established office and retail — 65% to 75%.
• Specialised: childcare, service stations, pubs, medical, motels — 50% to 65%.
• Vacant commercial land — around 65%, with a loan size cap.

On a $1.5 million warehouse at 70%, that is $450,000 of deposit before anything else. Add stamp duty, a valuation at $2,000 to $5,000, establishment fees of 0.30% to 1.00%, and legal costs, and the realistic all-in figure is closer to 30% to 35% of the price.

GST is the cost people forget

Where the vendor is registered for GST, 10% applies to a commercial sale. A $1 million purchase becomes $1.1 million of cash at settlement, and stamp duty is calculated on the higher figure.

The going-concern exemption removes the GST, but every one of five conditions has to be met: the vendor is registered, the buyer is registered at settlement, the property is leased at settlement, the parties are separate legal entities, and the contract states in writing that it is a going-concern supply. Miss one and you are funding an extra 10% that no lender will advance, waiting on a BAS refund — and the duty paid on that GST is never coming back.

Get your accountant across it before exchange. This is the most common reason a commercial settlement falls over on the day.

The lease is the asset

In housing, the property is the security and the tenant is incidental. In commercial, the lease largely is the investment, and lenders assess it that way.

What they look at is the weighted average lease expiry — how long the income is contracted for. Two to five years remaining is what banks want, particularly where there is a single tenant. Under twelve months and the loan is declined outright or the limit is cut, usually after the valuation has already been paid for.

Read the outgoings clause as carefully as the rent. Who pays land tax, council rates, insurance and building maintenance varies by state and by lease type, and misreading it means the net yield your whole purchase was priced on is wrong.

“The mistake I see most often is buying on the gross yield in the advertisement. Work out the net after outgoings, factor in a vacancy allowance, and price in the day the lease expires. If the deal only works with the current tenant in place at the current rent, it is not a deal, it is a bet.”
— Mansour Soltani, Commercial Broker

Valuation is where deals die

On specialised property, many lenders apply the loan-to-value ratio to vacant possession value rather than the going-concern figure you agreed to pay. For a childcare centre or a service station bought on a passing yield, the gap between those two numbers is wide, and it appears at valuation — after the contract, after the fee.

The same applies to standard security in a softer way: lenders take the lower of purchase price and valuation. Paying above the market on a competitive campaign means finding the difference in cash.

The finance term nobody reads

Bank commercial facilities commonly run three to five years, with repayments calculated over 15 to 25 years. At the end of that term the loan is reassessed from the beginning, not rolled over. Many facilities also carry a review every 12 to 36 months requiring financials and sometimes a fresh valuation.

With secondary office values under pressure, a revaluation at review can breach a loan-to-value covenant with every payment made on time, and the lender can ask for a margin increase or a paydown. Some non-bank and specialist lenders write 15 to 30 year terms with no annual review — a genuinely different risk profile for the same property.

Buying through a self managed super fund

From 10 August 2026, a fund can only borrow to buy business real property. Residential and mixed-use property with a residential component are out. Existing arrangements continue untouched, refinancing one is still allowed, and any contract exchanged before 10 August 2026 falls outside the change even if it settles later. The test is the exchange date, not settlement.

Our guide to buying property with an SMSF sets out the rules, the lenders and the tax treatment.

Where to start

Work out your borrowing limit before you inspect anything, because the asset type sets it and that changes what you can look at. Get the lease and the outgoings schedule in front of your accountant early. And do not order a valuation until a lender has confirmed appetite for that specific property — the fee is yours, it is substantial, and it does not follow you to the next lender.

If borrowing capacity is the constraint rather than the deposit, how commercial lenders assess a loan covers the tests you have to clear.

Frequently asked questions

1. Is commercial property a better investment than residential?

It generally yields more and the tenant usually pays the outgoings. It also carries longer vacancies, needs far more cash, and is harder to sell quickly. Different risk, not simply better.

2. How much deposit do I need?

Between 20% and 35% of the valuation depending on the asset, and 35% to 50% on specialised property. Budget 30% to 35% of the price in cash once duty, fees and GST timing are included.

3. What is a good yield on commercial property?

It depends entirely on the class and the lease. Prime CBD office ran 5.70% to 7.58% across the capitals in early 2026. Treat any advertised yield as gross until you have checked the outgoings.

4. Do I pay GST when buying commercial property?

Usually yes, at 10%, unless the sale qualifies as a going concern and satisfies all five conditions. Confirm it in writing in the contract before exchange.

5. What happens when the tenant leaves?

You carry the mortgage, the outgoings and the land tax until a new one is found, which in commercial can take many months. This is why lenders care about lease length and why you should hold a vacancy buffer.

6. Can I buy commercial property with my business as the tenant?

You can, and plenty do. Note that the lender disregards the rent because it is not arm’s length, and assesses it as an owner-occupied deal instead, which changes the product and often improves the rate.

Ready to talk to someone about a commercial loan? Tell us what you are buying and how the business is set up, and we will match you with a commercial finance broker who writes these deals every week. Send us the details.