Office: vacancy near three-decade highs across every major CBD
The Property Council of Australia's Office Market Report for the six months to July 2026 put Melbourne's CBD vacancy at 18.9%, the highest of any Australian capital, with Sydney at 13.3% and Brisbane at 10.2%. The national market is sitting near its highest vacancy since the early-1990s recession, as new premium-grade towers keep settling in while demand for older, secondary-grade space lags behind. CBRE's own Melbourne CBD figures for the same quarter corroborate the Property Council reading. The split between grades is widening: landlords of A-grade buildings in core locations are generally holding rents, while owners of ageing B- and C-grade towers are competing on incentives just to keep occupancy steady.
Industrial: still the tightest vacancy in the country, but the cheap yield is gone
National industrial and logistics vacancy held at 3.2% in the first half of 2026 on CBRE's measure, barely a fifth of what office is carrying, even as CBRE expects it to drift up toward 3.5% in the second half as a wave of new sheds is completed. Yields have kept compressing, just not evenly. Over the year to the June 2026 quarter, Perth's industrial yields tightened 37 basis points, Brisbane's 19 and Adelaide's 17, according to realcommercial.com.au's quarterly yields survey, while Sydney and Melbourne, already the tightest in the country at around 4.2% gross, had less room left to move. The practical effect for a buyer today is that most of the post-rate-hike discount has already been bid away in the two biggest markets; the easier repricing gains now sit in the smaller capitals, not the majors.
Retail: the quiet third horse, re-rating in the bigger formats
Retail doesn't get the attention office and industrial do, but CBRE's second-quarter 2026 figures show regional shopping centre yields compressing 7 basis points over the quarter and 22 over the year, the fastest move of any retail sub-sector, while neighbourhood centre yields eased back slightly during the quarter but are still 2 basis points tighter than a year ago. Net face rents rose across every retail format over the same quarter. CBRE's 2026 outlook points to a further 25 to 50 basis points of compression across regional, sub-regional and large-format centres through the rest of the year, helped by one of the thinnest development pipelines on record, with only around 700,000 square metres of new shopping centre space forecast nationally out to 2028. Retail's advantage right now isn't excitement, it's scarcity of anything new to compete with.
What a $715 million sale says about where the capital is actually moving
The clearest signal of all isn't a vacancy number, it's what the country's largest office landlord is doing with its own portfolio. In July 2026, Dexus exchanged contracts to sell three wholly owned office towers, 30-34 Hickson Road and 36 Hickson Road in Sydney, and 123 Albert Street in Brisbane, for a combined $715 million to BGO and its partners Cliffbrook Capital and Investa. Settlement is expected in October 2026, subject to FIRB approval, with about two-thirds of the price paid at settlement and the remaining third deferred for 30 months at a 6.25% annual coupon, a structure that itself reflects how much harder office debt and pricing has become to agree on. The sale took Dexus past its own roughly $2 billion divestment target a year ahead of its FY27 schedule. Tellingly, the company has said the proceeds are going toward reducing gearing, not toward buying more office, while its own industrial portfolio was sitting at 94.6% occupancy over the same period.
So which one wins right now?
None of the three is a clean win. Office has the lowest entry prices of the three sectors in headline terms, but that is exactly the problem: it is cheap because the market expects more vacancy and more incentives before it expects a recovery, and the country's own largest office owner is using asset sales to pay down debt rather than bet on the sector itself. Industrial has the strongest fundamentals, with the lowest vacancy by a wide margin, but the best of the yield compression has already happened in Sydney and Melbourne, leaving the smaller capitals as the only place still repricing meaningfully. Retail is quietly doing both at once: solid occupier demand, rising rents and a buyer pool that has worked out there is almost nothing new being built to compete with existing centres. For most investors, that points to retail and industrial's smaller-market pockets as where the next leg of value sits, with office best left to buyers prepared to wait out a vacancy cycle that even its biggest owner is not willing to bet on right now.