Australia Commercial Real Estate Market Projected to Reach USD 21.03 Billion by 2033

Market Overview
The Australia commercial real estate market size was USD 11.96 Billion in 2024 and is projected to reach USD 21.03 Billion by 2033. This growth is supported by a 5.80% CAGR over the forecast period from 2025 to 2033. Key drivers include hybrid working trends increasing demand for flexible office spaces, strong sustainability focus through green-certified buildings, and urbanization with infrastructure investments in major cities. Additionally, foreign investments and government policies aid steady growth and high demand for premium commercial assets.

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How AI is Reshaping the Future of Australia Commercial Real Estate Market
• AI-driven smart building management systems optimize energy use, aligning with Australia's growing emphasis on sustainability with 46% of C.B.D. offices now sustainability certified.
• Predictive analytics enhance demand forecasting in suburban and urban office spaces, aiding strategic decisions amid the shift to hybrid work models.
• AI-powered tenant experience platforms improve flexibility and service customization, matching the rising trend for coworking spaces favored by startups and SMEs.
• Integration of AI in property valuation supports better price benchmarking and competitive positioning in the market.
• Government incentives and ESG commitments are supported by AI tools for tracking compliance and sustainability targets.
• Automated market intelligence platforms support rapid response to supply-demand imbalances, accelerating adaptation in high-demand cities such as Sydney and Melbourne.

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Australia Commercial Real Estate Market Growth Factors
The rising demand for flexible office spaces is a major growth driver in the Australia commercial real estate market. In July 2024, the national office vacancy rate dropped to 14.6%, reflecting renewed strength in both C B D and non-C B D areas. Brisbane reported a vacancy rate of 9.5%, Sydney 11.6%, whereas Melbourne's rate increased to 18% due to scheduled new office space launches. More than 61.4% of Sydney's and 20% of Melbourne's upcoming developments are pre-leased, indicating robust market activity. Businesses, especially startups and SMEs, favor coworking and serviced offices for affordability and adaptability, accelerated by the ongoing hybrid work trend. This adaptation encourages landlords to introduce flexible lease terms, making flexible office options a key growth segment.

Investment in sustainable buildings is transforming the market, propelled by increased environmental consciousness among investors and tenants. Australia's Green Building Council certified over 1,000 projects in 2023/24 year, expanding Green Star-certified space to 64 million square meters. Nearly half of C B D offices have sustainability certifications, and green commercial spaces command higher rents and lower vacancies, especially in Sydney and Melbourne. The government's Net Zero policies and ESG commitments drive developers to integrate eco-features like solar panels, rainwater harvesting, and energy management systems. Sustainable certifications such as NABERS and Green Star are crucial to property valuation and tenant attraction, supporting the ongoing market shift towards green real estate.

The rapid suburban shift is another significant trend, with companies increasingly relocating offices away from costly central business districts to more affordable suburbs. Remote and hybrid work models reduce the need for expensive city-center offices, with commuting trends and transportation improvements making suburban locations more appealing. This localization enhances employees' work-life balance, boosting demand for suburban office spaces. Such movement is facilitated by greater transport connectivity and infrastructural support, contributing to market expansion beyond traditional urban cores. This trend also complements the growth of logistics and industrial property demand driven by e-commerce and last-mile delivery needs.

Australia Commercial Real Estate Market Segmentation
Type Insights:
• Rental
• Sales

End Use Insights:
• Offices
• Retail
• Leisure
• Others

Regional Insights:
• Australia Capital Territory & New South Wales
• Victoria & Tasmania
• Queensland
• Northern Territory & Southern Australia
• Western Australia

Key Players
• CoStar Group
• Domain Holdings

Recent Development & News
• May 2025: CoStar Group finalized a binding agreement to acquire the entirety of Domain Holdings for AUD 3.0 Billion, enhancing Australia's commercial real estate digital framework and expanding CoStar's international presence.
• June 2025: The Australian government increased collaboration with real estate developers to boost green building certifications and sustainability compliance, exemplified by over 1,000 Green Star-certified projects, incentivizing environmentally friendly developments.
• August 2025: Market data revealed a marginal decrease in national office vacancy to 14.6%, signaling strong demand resurgence supported by flexible office space growth and hybrid working arrangements driving leasing activity.

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