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Commercial property is poised for a rebound, with industrial, build-to-rent, retail, and office sectors drawing investors amid tech, demographic, and economic growth drivers.
The industrial and build-to-rent sectors will be high on investors’ wish lists next year as they brace for a commercial property comeback, according to a 2026 forecast.
Savills has shared its forecast for 2026, predicting a commercial rebound and highlighting the key sectors investors should watch for maximum returns.
In its Spotlight on 2026 report, the network said the commercial sector was bracing for a “bull market” to fuel more than $50 billion in capital deployment.
It said the industrial and living sectors, such as build-to-rent (BTR), would influence investors’ purchase decisions in 2026, with potential for income stability and capital growth, while retail and office markets would continue to rebound.
Industrial space
Savills said that the industrial space would be driven by the culmination of rapid artificial intelligence (AI) adoption and data localisation, boosting demand for digital infrastructure.
According to Savills Australia and New Zealand head of research, Katy Dean, the global race for data centre capacity has been ramping up, while AI has been unlocking record levels of capital.
However, while data centre investment will remain strong, competition for land and grid capacity will increase over the coming year.
Dean said that hyperscale data centres – computing environments that offer massive ability to scale and meet data demands – would commit billions of dollars to new infrastructure.
She said that the effect would be rising demand for sites with land and energy security.
“Australia has become a strategic node, but balancing this growth with net-zero and grid-efficiency goals is the challenge,” she said.
Living sectors
According to the network, the BTR, student, and senior living sectors were forecast to expand in 2026, driven by changing demographics and the need for defensive income streams among institutional capital.
As stated by the Property Council of Australia, the national pipeline of BTR projects was valued at more than $30 billion, marking a 35 per cent leap in just 12 months.
Factors behind the momentum have included the current rental housing crisis and government reforms, such as changes to managed investment trusts.
Apart from BTR properties, Savills also predicted a boost for hospitality assets due to tourism inflows and the revival of business travel.
Retail and office sectors
Savills also predicted a retail revival in 2026, with limited new supply and rising consumer demand set to drive rental growth and capital appreciation in the space.
“Daily-needs, convenience, and food and beverage formats will lead occupancy gains, with rising café and restaurant spending supporting long-term growth,” it said.
Meanwhile, the firm said renewed confidence will be seen in Sydney and Melbourne’s office asset sectors, forecasting improved liquidity and early signs of yield compression.
“The flight to quality will accelerate, with environmental, social and governance (ESG) enabled, amenity-rich offices dominating leasing and pricing trends,” it said.
Economic outlook
Looking more broadly at global economic conditions, Savills said there will be more pressure to deploy capital into assets such as property, driven by factors including lower interest rates, persistent inflation and currency debasement.
It also said the International Monetary Fund (IMF) was predicting advanced economic growth of 1.6 per cent in 2026, with global investment volumes forecast to increase by 23 per cent.
“Meanwhile, the Reserve Bank of Australia (RBA) expects Australia’s gross domestic product (GDP) to strengthen to around 2 per cent,” it added.
Savills said many investors were sitting on undeployed capital, which would provide a hedge against inflation and currency risk and prompt them to capitalise on the new asset price cycle.
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Gemma Crotty
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