Commercial property outlook softens as retail loses ground - NAB Commercial Property Survey Q3 2026

19 October 2026
Economy and Markets

• The NAB Commercial Property Index fell 15 points to +1 in the September quarter, returning to its long-run average.  

• Retail recorded the largest decline, with its index falling 27 points to -7, while industrial remained the strongest sector at +23. 

• Property professionals reported that access to both debt and equity funding became more difficult during the quarter.  

Australian commercial property sentiment softened for a second consecutive quarter, with weaker retail conditions weighing on the market, according to the latest NAB Commercial Property Survey.  

The NAB Commercial Property Index fell from +16 in the June quarter to +1 in the September quarter, bringing it back in line with its long-run average. Confidence about the next 12 months also declined, falling 10 points to +10, while two-year confidence eased to +33. 

NAB Chief Economist Dr Sally Auld said the results showed conditions varied considerably across commercial property sectors. 

“Commercial property conditions softened in the September quarter, with retail driving much of the decline. Industrial property remains the strongest sector, despite some moderation in sentiment,” Dr Auld said.

Retail sentiment fell 27 points into negative territory at -7. Industrial sentiment also eased but remained positive at +23, while office sentiment was unchanged at +9.  

Conditions also varied across states. NSW recorded the largest decline in sentiment, falling 35 points to -17. Victoria remained in negative territory at -9 but improved by six points, while Queensland rose eight points to +48, recording the strongest overall sentiment across the states. 

Property professionals expect capital values to fall over the next 12 months for office (-1.0%) and retail (-1.3%), while industrial values are expected to rise 1.2%. Office rental growth expectations improved to 1.8% over the next year, matching expectations for industrial rents. 

Funding conditions also became more challenging, with property professionals reporting a further deterioration in access to both equity and debt funding.

Dr Auld said there were clear differences across the market.

“While the overall market has softened, there are some clear differences across sectors and states,” Dr Auld said.

“Industrial property remains relatively resilient, while tougher funding conditions continue to present challenges for the market.”

The survey also examined the impact of property taxes, including land tax and stamp duty. More than half of property professionals (55%) said property taxes increased rental costs, while 42% said they reduced willingness to invest. 

The Q3 2026 survey included 228 property professionals spanning real estate agents and managers, property developers, asset and fund managers, and owners and investors.

Read the full NAB Commercial Property Survey Q3 2026.