Commercial property trends to watch in 2024

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People having meeting in contemporary office interior
People having meeting in contemporary office interior

Despite its challenges in 2023, the trends shaping commercial property show a sector that is evolving and persisting as an interesting and attractive destination for capital in the long term.

A wrap of 2023: the orderly unwind


Concerns around the cost of capital and an uncertain rate outlook have dominated the commercial property market for the last year, and all asset classes have been impacted.

But while a rapid rise in interest rates would typically signal an equally rapid downturn in property prices, in 2023 the response was far more controlled than many expected.

It’s a process Laurence Hart, National Head of Property Lending at Macquarie Business Banking calls an "orderly unwind.”

“Normally, in a big downturn we’d see a rush of forced sellers,” says Hart. “This time the response has been much more controlled. Investors may have sold below previous book values, but so far we haven’t seen defaults or forced sales at whatever price they can take.”

Hart credits this in part to a change in the banking environment. Many investors also came into 2023 with lower leverage than in previous years, giving them sufficient equity buffer to ride out the downturn.

Trends and dynamics in the traditional sectors of office, industrial and retail also continued to feel the fallout of a long-running evolution in social and community behaviours and expectations.  

In the office sector, the force of hybrid work continues, with large occupiers focusing their leasing on high-quality space to boost productivity and incentivise employees to return to the office. This has led to a polarisation – increasing demand for premium-grade office space over lower-grade buildings, aided by shifts to minimise operational carbon emissions.

Consumer interest in online shopping and ecommerce supported a strong demand upswing for warehousing and logistics space. Many shopping centres upgraded their infrastructure to provide retailers with three ways to access the market – in store, click and collect, and online delivery.

Warehousing and logistics performance was strong in 2023, due to low rental vacancies and elevated demand. David Roberts, Head of Real Estate Strategy at Macquarie Asset Management, believes Australian warehousing distribution is the strongest globally in terms of fundamentals. “Vacancy rates are very tight,” he says.

Long-term lens on the economy

Successive rate rises in the early part of the year took the market by surprise, and a significant jump in the cost of capital has impacted commercial property transactions and pricing.

But while it has been a challenging period, the long-term outlook remains optimistic. With relatively good economic performance and strong population growth ahead, doing business in Australia has a lot of positives in the current market. However, global trends may signal further pricing challenges in the near term.

“Generally, the Australian commercial property market tends to lag behind what we see elsewhere,” Roberts says. “We’ve seen pricing corrections in the US and the UK and Australia’s adjustment is just lagging by three to six months.”

Insights from Macquarie’s designers


Macquarie Group has a team of designers that are charged with imagining and creating offices of the future. Their insights on the future of workplace design, driven by big picture social and economic trends include:


Maximum utility

 There is a growing desire to maximise the utilisation of buildings, particularly office buildings, to support diverse programs and uses 24/7. A great example of this is the ability for our spaces to support non-profit and other foundation uses, particularly on our lower occupancy days. 

The goals of this are threefold: First, how might we most efficiently utilise office spaces in our cities? Second, how might we further activate urban hubs that continue to be impacted by lower office building occupancies? Third, how might our physical assets be a direct component of our contribution to our surrounding communities, and help our organisation and our people support non-profit, civic, and community-based initiatives?”

Andrew Burdick
Global Design Director, Macquarie Group


Inclusive environments

 Employers recognise the importance of supporting their people, especially with their wellbeing, and so office designs now incorporate amenities such as wellbeing studios, parents’ room, all-gender bathrooms, music rooms, multi-faith reflection rooms, end of trip facilities, change rooms, bike racks, including electric bikes for those who like to cycle into the office.”

Bronwyn Goodwin
Director of Workplace Experience, Metro Martin Place Project


Moving mindsets

 We see an opportunity to shift to a ‘real estate as a service’ paradigm. This a shift away from static real estate and a built environment mindset. The future workspace teams may select from a diverse range of services and facilities to support changing business requirements. Over the course of a week, a team may transition from ‘team home base’ to a ‘cross discipline project room’ to a day spent in meeting and event spaces. This demonstrates the need for dynamic spaces, to support a more dynamic workforce.”

Anthony Henry
Head of Workspace Design, Macquarie Group

Looking to the long run


While previously, traditional real estate assets like large-scale shopping malls and mixed-grade office buildings have been staples of the commercial property investor’s portfolio, in today’s market they may offer less defensive protection than before.

However, for investors who can tap into the emerging alternative assets market, there are opportunities in logistics, build-to-rent, data centres and grocery-anchored retail. And as always, it’s important to maintain a long-term view.

“Be patient and wait for opportunities,” Hart says. “While transactions have been slow, it’s likely that pricing expectations will come down – either due to buyer stress or a more realistic outlook on the market and this will create more momentum in 2024.”

“There’s always a possibility the turnaround could be quite quick,” he says. “We think there are likely to be buying opportunities in 2024.”

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Additional Information




The information in this article was finalised on 23 November 2023.

This article has been prepared by Macquarie Business Banking, a division of Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 for general information purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service and nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.

Some market commentary incorporated in this article has been prepared for general informational purposes by the MAM Real Estate Strategy team, who are part of Macquarie Asset Management (MAM), a business division of Macquarie Group (Macquarie), and is not a product of the Macquarie Research Department. This market commentary reflects the views of the MAM Real Estate Strategy team and statements in it may differ from the views of others in MAM or of other Macquarie divisions or groups, including Macquarie Research. This market commentary has not been prepared to comply with requirements designed to promote the independence of investment research and is accordingly not subject to any prohibition on dealing ahead of the dissemination of investment research. Macquarie salespeople, traders and other professionals may provide oral or written market commentary, analysis, trading strategies or research products to Macquarie’s clients that reflect opinions which are different from or contrary to the opinions expressed in this market commentary. Macquarie’s asset management business (including MAM), principal trading desks and investing businesses may make investment decisions that are inconsistent with the views expressed in this commentary.

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