Melbourne’s commercial property market might be staging a comeback.

The Victorian capital city’s commercial property market is showing signs of growth for the first time since 2022, according to the most recent Commercial Property Index, from National Australia Bank (NAB)

Demand for office space is driving the growth, up 21 points during 2025’s second quarter, marking the first upward shift in Melbourne’s office market since the pandemic, NAB said. The report also showed an increased need for retail space. 

Andrew Auerbach, NAB group executive for business and private banking, said this is a positive development for property investors. 

“With confidence returning to Melbourne’s commercial property market, businesses are feeling more secure about leasing new office space, expanding operations, or even buying property,” Auerbach said. “We’re seeing renewed interest from both local and interstate investors, and this momentum is creating new opportunities for growth and innovation across the region.

“And the return of confidence in commercial property more generally is a positive signal for the broader economy,” he added. “It suggests that businesses are feeling more optimistic, hiring staff and planning for growth.”

But Bernard Desmond, founder and chief executive officer of Melbourne-based brokerage Blank Financial, said the shift also opens doors for brokers. 

“There’s a huge opportunity, rather than just focusing on mom and dad, or residential owners,” Desmond told Australian Broker. “The small business owners are a great opportunity for brokers to service them in their commercial needs. It could be a business owner renting a space, and then you help them acquire the space, because the prices are still quite favorable and it’s a buyer’s market. So it’s definitely a great opportunity for brokers to diversify and add commercial to add another revenue stream to their business.”

Melbourne has been weathering a tough property market since the pandemic, but signs of a rebound are emerging. After a sluggish 2024, momentum is building. And investors are taking notice across both residential and commercial sectors.

Recent interest rate cuts are drawing buyers back, and with median house prices still lower than in Sydney, Brisbane and Canberra, Melbourne is becoming a magnet for migration, particularly among homebuyers looking for better value.

On the commercial side, office space remains a lingering concern in Australia’s commercial property market.

The national vacancy rate has hit a 30-year high of 15.2% in the six months to July 2025, according to the Property Council of Australia. But Melbourne is showing a hint of resilience. While vacancies climbed in Canberra, Brisbane and Sydney, Melbourne’s fell slightly: from 18% to 17.9%.

Desmond argued that a complete shift back to full-time office use isn’t likely anytime soon. 

“There’s still the preference to work from home,” he said. “The workforce still wants some level of hybrid, or work from home possibility and flexibility. So a push to come back to what it was pre-COVID[-19] is going to be, I think, too optimistic and too early to call it out that that’s going to be the case.”

What Desmond said he is seeing more of is owner-occupied commercial purchase demand.

“Customers are finding it much easier and cost effective,” he explained. “If you’re a business owner, you’re obviously looking at reducing ongoing rentals and creating another asset by buying these properties and then leasing it back to their businesses. That’s another way to grow their portfolio and their investments by owning these commercial assets.”

Source/Credit: brokernews.com.au