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Australia Commercial Property and Industrial Logistics Guide

the commercial property and the industrial logistics investments in Australia. The guide covers: the commercial property types (the "office, the retail, the industrial, the logistics") — (a) the "office property" — the "CBD office towers and the suburban office parks" — the "long-term leases with the corporate tenants" (the "5 to 10-year leases"), (b) the "retail property" — the "shopping centres, the neighbourhood centres, the retail strips" — the "higher yield but the higher vacancy risk with the online shopping shift", (c) the "industrial property" — the "warehouses, the distribution centres, the factories" — the "strong demand from the e-commerce and the logistics growth", (d) the "logistics property" — the "fulfilment centres, the cold storage, the last-mile delivery hubs" — the "highest growth segment" with the "low vacancy rates below 1.5% in the major cities"; the A-REITs (the "Australian Real Estate Investment Trusts") — the "A-REITs" are the "ASX-listed trusts" that own and manage the "commercial property portfolios"; the major A-REITs include: (a) the "Goodman Group — the GMG" (the "industrial and the logistics — the largest A-REIT"), (b) the "Scentre Group — the SCG" (the "retail shopping centres"), (c) the "Dexus — the DXS" (the "office property"), (d) the "GPT Group — the GPT" (the "office, the retail and the logistics"), (e) the "Charter Hall — the CHC" (the "diversified commercial property"), (f) the "Mirvac Group — the MGR" (the "office and the residential"); the tax treatment of the commercial property investments (the "income and the capital gains tax") — the commercial property investment income (the "rental income") is the "assessable income" (the "taxed at the marginal rate"); the deductions include: the "interest on the borrowing", the "depreciation" (the "division 40 — the plant and the equipment" and the "division 43 — the capital works at 2.5% or 4%"), the "property management fees", the "maintenance and the repairs", the "land tax" and the "council rates"; the "capital gain" on the sale of the commercial property is subject to the "CGT" (the "50% discount for the individual holding more than 12 months").

Industrial and Logistics Growth Drivers

  • E-commerce acceleration: The "Australian e-commerce market" has grown from $30 billion in 2019 to approximately $60 billion in 2025 — the "online retail penetration" of 15% to 18% (the "still below the US at 25% and the UK at 30%" — the "further growth expected"). The e-commerce growth drives the demand for the "warehouse space, the fulfilment centres and the last-mile delivery hubs".
  • Supply chain reshoring: The "supply chain diversification" — the Australian businesses are shifting from the "just-in-time (JIT)" to the "just-in-case (JIC)" inventory management. The "onshore warehousing demand" has increased by 20% to 30% since 2022. The "cold storage" and the "temperature-controlled logistics" are the highest-demand sub-sectors.
  • Prime logistics locations: The "Western Sydney Aerotropolis", the "Melbourne West (Truganina, Laverton, Altona)", the "Brisbane Trade Coast", the "Perth Kewdale/Forrestfield" and the "Adelaide Outer Harbor" are the prime industrial and the logistics locations. The "land scarcity" in these locations drives the "rental growth of 10% to 20% per annum".

For the A-REIT tax treatment and the distributions, see our ETFs Guide →.

Commercial Property Investment Structures

  • Direct ownership: The "direct commercial property ownership" — the investor buys the "commercial strata unit, the warehouse or the office" directly. The "minimum investment" is $500,000 to $2 million for the commercial property. The investor receives the "rental income" and benefits from the "capital appreciation". The "direct ownership" provides the "full control" but the "lower liquidity".
  • Unlisted property funds: The "unlisted commercial property funds" (the "pooled funds" managed by the property fund managers — the "Charter Hall, the ISPT, the EQT, the Altis") provide the "access to the institutional-grade commercial property" with the "minimum investment of $10,000 to $100,000". The unlisted funds pay the "quarterly distributions" and the "capital growth". The funds may have the "liquidity constraints" (the "quarterly or the half-yearly withdrawals").
  • A-REITs: The "A-REITs" provide the "ASX liquidity" — the investor can buy and sell the REIT units at the "market price" during the trading hours. The A-REITs pay the "quarterly or the semi-annual distributions" (the "yield of 3% to 6% per annum"). The A-REIT distributions are the "assessable income" — the "franking credits" may be attached to the Australian property income.

For the property tax rules and the deductions, see our Property Tax Guide →.