National Commercial Real Estate Overview
Noral Wild, Chief Executive of Cushman & Wakefield ANZ, acknowledged that 2024 has diverged from many expectations, with economic growth not as robust as initially forecasted. However, she remains optimistic about Australia’s recovery in 2025, citing a moderation in inflationary pressures that will enable the Reserve Bank to reduce interest rates, thus boosting the broader economy.
Despite these challenges, Ms Wild highlighted a significant recovery in commercial real estate (CRE) capital markets, noting that investment volumes in 2024 have already surpassed 2023’s total by A$1 billion through the first three quarters, with further growth anticipated in Q4. She observed that asset classes such as office, retail, and industrial have outperformed last year’s investment volumes, while alternative sectors are on track to match 2023’s numbers.
Looking to the future, Ms. Wild projected that CRE valuations would stabilize in 2025, with transaction volumes gradually recovering. She forecasts an overall 8% decline in CRE pricing during the current cycle, followed by a robust 20% rebound starting in late 2025 and continuing through 2030. This recovery, she noted, would vary across asset types as interest rates ease and the economy emerges from a cyclical slowdown, ultimately driving renewed market momentum.
National Capital Markets
Josh Cullen, Cushman & Wakefield’s International Director and Head of Capital Markets for Australia and New Zealand, identified 2024 as a year of recovery for commercial transactions, marked by the highest transaction volumes in recent years. Sydney, in particular, led the charge with over $5 billion in transactions, driven by strong investor confidence in the city’s office market, which remains poised to benefit from future supply shortages.
Cullen pointed out that the office sector, after experiencing significant valuation adjustments, now offers compelling value compared to other asset classes. He emphasized that while investor sentiment remains cautious, there is increasing interest in the office market as investors recognise the long-term potential for capital growth.
National Logistics & Industrial Capital Markets
Tony Iuliano, Cushman & Wakefield’s Head of Logistics & Industrial in ANZ, discussed the strength of the logistics and industrial sectors, which have seen investment volumes significantly surpass 2023 levels. He attributed this growth to solid sector fundamentals and sustained demand for logistics assets, particularly as debt costs have stabilized since late 2023, offering greater clarity on pricing.
He also noted that while investment volumes have surged, they still represent only 2% of the total investable universe, highlighting that assets in this sector remain tightly held. Superannuation funds have driven deal volumes at the larger end of the market, while offshore capital, particularly from Japan, has increasingly flowed into Australian logistics and industrial assets.
Looking ahead to 2025, Iuliano expects a more dynamic investment landscape as interest rates decrease and bond yields moderate. This, he suggested, would trigger greater liquidity and investment volumes in the sector. He anticipates continued strong demand for core-plus and value-add opportunities but also sees a potential inflection point where counter-cyclical strategies may gain traction.
National Logistics & Industrial Leasing
David Hall, Cushman & Wakefield’s National Director of Brokerage for Logistics & Industrial in ANZ, reflected on 2024 as a year of market adjustment, noting that vacancy rates increased due to a normalization of demand and a surge in speculative stock additions. Nevertheless, take-up volumes have surpassed pre-pandemic levels by over 40%, with vacancy rates remaining among the tightest globally.
Looking ahead to 2025, Hall projected that leasing demand would strengthen further, fueled by a recovery in economic growth and consumer spending. He forecast a 20% increase in take-up volumes, reaching around 3.6 million sqm, and suggested that supply could become even tighter as developers scale back on new projects.
National Investment Sales
Luke Etherington, Head of Investment Sales at Cushman & Wakefield, described 2024 as a year of cautious optimism, where investors largely waited for asset values to stabilize before making significant moves.Â
However, he noted that demand for high-quality assets remained steady throughout the year, with activity picking up in the fourth quarter. Etherington expressed confidence that 2025 would see further stabilization of asset values, with a likely decrease in the cost of capital, which would stimulate transaction volumes.
He also foresees a resurgence in large-scale mergers and acquisitions and fund recapitalizations, reflecting a shift in investor sentiment. The focus is now on when, rather than if, capital should be reinvested into real estate markets. This change in mindset could be the driving force behind a stronger 2025.
National Project Development Services
Mitch Wilson, Head of Project & Development Services at Cushman & Wakefield ANZ, noted that 2024 saw a slowdown in commercial fitout works, as tenants increasingly opted for already-fitted spaces. Despite this, Wilson emphasized that investors are still focused on ensuring the quality of construction, particularly as increased construction costs put pressure on returns.
Looking ahead, Wilson foresees similar challenges in 2025, with a continued focus on government spending, especially with the upcoming federal election and mid-2025 contract renewals. He also pointed to an increased need for property investors to understand their assets, particularly in light of new sustainability reporting requirements.
