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Investors have gradually re-entered Melbourne’s commercial property market, as the Victorian capital begins to show growth for the first time since 2022.
Confidence in the city’s commercial property sector has turned positive for the first time since 2022, according to National Australia Bank’s (NAB) latest commercial property survey.
NAB said the boost in Melbourne’s commercial property sector has been driven primarily by a strong recovery in the office market, with the retail sector also beginning to show signs of improvement.
According to the lender, confidence in Melbourne’s office market rose to +21 in the latest quarter, marking its first positive reading since the pandemic.
For the first time since COVID-19, buyers and tenants have been feeling confident about investing in and leasing office spaces in Melbourne.
The renewed optimism has been supported by lower vacancy rates, expectations of rising property values, and a generally more positive outlook among developers and investors.
NAB group executive, business and private banking, Andrew Auerbach, said the positive shift in sentiment provides greater stability and reduces the risk of declining property values.
“With confidence returning to Melbourne’s commercial property market, businesses are feeling more secure about leasing new office space, expanding operations or even buying property,” Auerbach said.
“We’re seeing renewed interest from both local and interstate investors, and this momentum is creating new opportunities for growth and innovation across the region.”
Auerbach said the optimism extends beyond Melbourne’s commercial property market, with NAB reporting positive sentiment across all sectors and states.
While the commercial property index dipped slightly this quarter to +20 from +24, it remains near its highest level in eight years.
NAB’s report highlighted that Australia’s commercial property recovery is being driven by strong performance in the industrial and hotel sectors, alongside improvements in office and retail markets, particularly in Victoria.
Additionally, rising property value expectations, lower vacancies and easier access to finance have also fuelled renewed confidence among buyers and investors.
“And the return of confidence in commercial property, more generally, is a positive signal for the broader economy. It suggests that businesses are feeling more optimistic, hiring staff and planning for growth,” Auerbach said.
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