Pre-war data shows commercial property sentiment steady, confidence easing

• Market sentiment edged higher in Q1 2026, close to the series high recorded in late 2025.
• Confidence for the next 12 months and two years eased, led by interest rate expectations.
• Industrial remains the standout; office conditions improved; retail softened.

The NAB Commercial Property Index improved slightly in the March quarter (+30) and remains near the series high, pointing to resilient conditions across the sector before the outbreak of the conflict in the Middle East.  

NAB Senior Economist Brien McDonald said industrial property continued to lead the market, while office improved from the December quarter.

“The survey showed sentiment held up, with the overall index close to its recent peak. Industrial remained the standout, while office improved and retail eased,” Mr McDonald said.

“Confidence moderated from very elevated levels as respondents reassessed the path for interest rates, but expectations were still positive over the next 12 months and two years.”

Industrial sentiment rose to +46 in Q1 and leads confidence (+58 next 12 months; +64 next two years). Office sentiment lifted to +31, while retail fell to +18. Respondents expect industrial rents to grow 2.9% over the next year (3.3% over two years) and see the national office vacancy rate easing to 10.5% over the next 12 months.

McDonald said the report demonstrated resilience in the sector going into the energy shock, but interest rates were having an impact.

“The Q1 survey suggests the sector entered the period in a relatively resilient position, before the conflict in the Middle East escalated. Sentiment remained, but confidence was already cooling and funding conditions were still reported as tight, so it will be interesting to see how this plays out in Q2,” he said.

Read more in the full report.