Out of the three main asset classes, industrial – the other two being retail and office – was the only consistent performer in terms of yield compression over the second quarter of 2026.
In the three months through June 2026, realcommercial.com.au’s latest commercial yields report revealed industrial was the only asset class where yields are sitting lower in every capital city compared to 12 months ago.
In contrast, office yields had seen the most variation, softening in Melbourne and Perth, compressing in Brisbane and Adelaide, while relatively flat in Sydney.
Retail yields, while compressing strongly, owing to strong demand and limited supply, still sit a lot higher than the other two asset classes, which report author and REA Group senior economist Anne Flaherty puts down to higher perceived risk in the sector.
Compressing yields have an inverse relationship with rising property values, which reflects ongoing demand in the industrial sector, according to Ms Flaherty.
Commercial yields data over the three months through June 2026 reveal a mixed picture.
This is also reflected in realcommercial.com.au listings data, where eight out of the 10 most-enquired listings over the past 90 days have been in the industrial sector.
Seven out of 10 of the most-enquired industrial properties over the past 90 days have been in Western Australia, with enquiry partly reflecting demand, and thus compressed yields in Perth.
Industrial yields in the west had compressed sharply to 5%, down 9 basis points over the quarter, and 37 basis points over the past year.
That said, industrial yields were still second highest in Perth compared to the other four major capital cities.
Industrial was the only asset class to record compression across all areas over the past 12 months to June 2026.
The data is backed by a report on the industrial sector released earlier in July by CBRE.
The industrial vacancy rate over the first six months of 2026 sat at 3.2% nationally, placing Australia as one of the stronger performers globally.
More than 1.4 million net square metres were absorbed – double the level recorded in the second half of 2025.
In Perth, vacancy shrunk to just 1%, attributed to take-up of logistics, warehousing and e-commerce hubs.
REA Group senior economist Anne Flaherty.
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A stand-out sub-sector
Small-format industrial such as storage facilities, mixed-use spaces, and smaller warehouses have performed particularly well at a national level.
Eight out of the 10 most-viewed industrial properties on realcommercial.com.au over the past 90 days have been small format, typically less than 300 square metres.
In part, this is due to them being easy to understand, often on a strata title, and at a lower price point, according to Ray White Commercial Western Sydney director Joseph Assaf.
He said the sub-sector has been one of the early movers for self-managed super fund (SMSF) investors jumping ship from the residential sector.
Pineapple Workstores in Hidden Valley, Queensland, has been one of the most-viewed listings so far in 2026. Picture: realcommercial.com.au
“We expect commercial strata, particularly industrial, to remain one of the major beneficiaries if SMSF buyers continue moving away from residential investment strategies.
“Many developers are now reaching out to understand how they can best position their projects to capture this emerging buyer profile.”