First, what does “Commercial” mean in Australian real estate?

Simply put, a commercial property is any real estate mainly used for business or income-producing purposes, rather than personal living. This can include buildings rented to businesses, multi-tenant residential buildings (above a certain size), and even vacant land with the potential for income.

Here’s a breakdown of the most common categories and who they might suit:

1. Retail Spaces

• Think of strip malls, standalone shops, convenience stores, and storefronts on main streets.
• Leased to: Restaurants, salons, local boutiques, and national chains.
• Good for: Investors seeking visibility, stable tenants, and often triple net leases (NNN) where tenants pay all expenses.

Fun fact: A McDonald’s or a Chemist Warehouse building on a corner lot is a retail commercial property, and investors favor those types of tenants.

2. Industrial Properties

• Think of warehouses, distribution centers, flex spaces, and manufacturing facilities.
• Leased to: Logistics companies, manufacturers, auto shops, or even e-commerce sellers.
• Good for: Investors looking for lower tenant turnover, larger spaces, and often easier management.

3. Office Buildings

• Think of high-rises, medical buildings, suburban office parks, or single-tenant buildings.
• Leased to: Law firms, tech startups, realtors, therapists, and medical clinics.
• Good for: Investors who prefer longer lease terms and greater customization for build-outs.

Note: Office markets can be more challenging in a post-pandemic environment, depending on location and tenant type. We recommend very specific office investments only and advise caution.

4. Multifamily (5 Units and Up)

• Think of apartment buildings with 5 or more units, student housing, and senior living.
• This is where residential becomes commercial—1-4 units = residential; 5+ = commercial.
• Good for: Residential investors making their first move into commercial real estate. Financing, valuation, and management models change here.

5. Special Use Properties

• Think of hotels, gas stations, daycares, churches, schools, or event venues.
• These often have niche tenants or operations and may need more careful examination.
• Good for: Experienced investors or those with specific industry knowledge.

6. Mixed-Use Properties

• Think of a storefront on the ground floor with apartments above.
• Common in urban and walkable suburban areas.
• Good for: Buyers seeking varied income sources from one building—both business and residential rent.

Why it matters

Knowing what qualifies as a commercial property goes beyond vocabulary. It impacts:

• Financing (Banks lend differently)
• Valuation (based on income, not comparable properties)
• Regulations and zoning
• Tenant laws and leases
• Your risk, return, and growth potential

Thinking about your first commercial deal? 

You don’t have to dive into a $5M shopping center. Many investors start with smaller properties, like a retail shop, a small industrial site, or even a modest suburban office on a second floor.

What matters is having the guidance to help you understand:

• What constitutes a good deal (and what doesn’t)
• What to expect with commercial financing
• How to calculate real-world risk and return
• How to identify red flags
• Where and what to buy in the current cycle