As we reach the end of 2025, a year marked by contradiction, frustration, resilience and quiet opportunity, it feels appropriate to pause and take stock. Not of headlines or sentiment cycles, but of what the market actually revealed about itself.
The year began with the sense that we were still at “Twenty Minutes to Midnight” — a market waiting for clarity, not quite ready to declare its next chapter.
By mid-year, with retail steady, industrial cooling but still robust, and prime office leasing flickering back to life, the clock edged forward to Quarter Past Midnight.
But by October, the scene darkened again as Melbourne’s CBD confronted a wave of safety and perception issues that threatened to unwind fragile progress.
And yet as we close out the year — there are unmistakable signs that the foundations of the next up-cycle are quietly being laid.
1. Residential Development: The Sector That Must Lead the Next Cycle
If there is one sector that simply cannot stay dormant forever, it is residential development — both pure residential and mixed-use. Victoria needs housing. Australia needs housing. Migration remains strong. Construction pipelines are thin. Planning reform is unavoidable and finally in motion.
The Victorian Government’s reforms across activity centres — while imperfect — signal that density must follow infrastructure and that development feasibility must be restored. Residential development isn’t just an economic driver — it’s the backbone of population stability and workforce mobility.
Those who assemble and position projects in 2026–2028, particularly in activity centres, will be the early winners.
2. Office: A Truth in Two Parts
You cannot talk about “the office market” anymore — it is two markets.
Premium assets with strong ESG, natural light and amenity are stabilising. Secondary stock, however, faces structural obsolescence.
Melbourne’s CBD cannot be judged on weekday performance alone. Even as weekday foot traffic struggles, night-time and weekend vibrancy remains strong. The CBD’s problem isn’t desirability — it’s perceived safety and weekday purpose.
This is a solvable challenge. But it requires:
- Repurposing pathways for secondary office
- Increased police presence and safety enforcement
- Owners to become operators, not passive landlords
3. Logistics & Digital Infrastructure: Stability in a Volatile World
Logistics, warehousing and data infrastructure remain supported by global megatrends: online retail, AI adoption, compute capacity expansion and supply-chain localisation.
The sector has cooled from explosive growth to dependable performance. Vacancy rates below 2% nationally tell the story. This is the bond-equivalent of commercial property — stable, essential and underpinned by necessity.
4. Healthcare Property: A Sector Built on Human Necessity
Telehealth cannot replace diagnostics, imaging, procedures or specialist care performed safely in purpose-built facilities.
Healthcare real estate is becoming the logistics equivalent for the human body — critical, repeat-use and resilient to cycles.
Demand is driven by:
- An ageing population
- Rising chronic disease
- Continued immigration-driven utilisation
- The shift to community-based outpatient care
5. Agriculture & Food Production: The Sleeper Sector No Longer Sleeping
Another point gaining real momentum: the world needs food.
Agricultural land and ag-operations attract increasing capital due to:
- Rising global food demand
- Tight supply constraints
- Water rights and carbon markets
- Institutional capital movements toward land as an inflation hedge
In uncertain times, capital follows permanence — and no need is more permanent than eating.
6. What People Need vs What People Want
Needs (high certainty demand):
- Shelter
- Healthcare
- Food
- Logistics & digital infrastructure
- Essential retail
Wants (variable demand):
- Hospitality
- Lifestyle retail
- Experiences
- Fitness and entertainment offerings
- Premium CBD office amenity
Wants don’t disappear — they concentrate in the best locations with strong demographics.
7. What 2025 Taught Us — and What 2026 Requires
Throughout the year, a few themes became undeniable:
- The market is uneven, not broken.
- Quality is a prerequisite, not a preference.
- Governance and politics matter more than ever.
- Melbourne must confront safety issues head-on.
- Opportunity is forming beneath the fear — especially in residential development, healthcare, agriculture, mixed-use and repurposed office.
A Christmas Message: Hope with a Hard Edge
It’s tempting to view 2025 as a year of setbacks. But from a cycle perspective, these years often create the richest opportunities.
Markets recover not when conditions feel perfect, but when necessity forces recalibration, policy responds, and capital grows tired of waiting.
2025 was the recalibration year.
2026 may be the year where patience and preparedness finally meet opportunity…
I wish you and your family and friends all the very best for the festive season and would like to acknowledge my appreciation for the time you invest in reviewing my thoughts on the Australian Commercial Property Market.
Until next time,
Mark Wizel