Victoria’s commercial and retail property sector is continuing to adjust after several years of disruption driven by the COVID-19 lockdowns, rising interest rates, changing occupier behaviour and shifting investor sentiment. Rather than a broad downturn, we are seeing the market being increasingly defined by a genuine polarisation between high‑quality assets and those facing structural or leasing challenges.
In the office market, elevated vacancy over an extended period remains a key issue, and this is particularly noticeable across older and secondary‑grade CBD stock. Hybrid working has permanently reduced demand generally, and this has been felt around less efficient buildings, resulting in higher incentives and increased pressure on values. Conversely, premium offices with strong ESG credentials, modern amenities with favourable end of trip (EOT) facilities and good transport access are seeing improved enquiry, reflecting an ongoing flight to quality.
Retail property performance remains uneven. Neighbourhood and convenience‑based centres anchored by supermarkets and essential services continue to perform strongly, supported by population growth and limited new supply. In contrast, some CBD and inner‑city retail locations are still adjusting to reduced weekday foot traffic, with outcomes increasingly dependent on tenancy mix, pricing flexibility and landlord responsiveness.
Across all sectors, higher construction and compliance costs, combined with tighter funding conditions, have reduced development feasibility and dampened transaction volumes. However, a thinning development pipeline may help support rents and asset performance over the medium term as demand stabilises.
Overall, while challenges remain, current conditions are presenting opportunities for well‑positioned assets backed by proactive management and realistic leasing strategies.
“The Victorian market has moved into a more selective phase. Assets with strong fundamentals, flexibility and quality are continuing to attract occupiers and capital, while secondary stock requires a more hands‑on and strategic approach. It’s no longer a one‑size‑fits‑all market.”
About CRS Property
CRS Property is a trusted commercial real estate agency specialising in sales, leasing, and property management across Victoria. With deep market knowledge and a client-first approach, CRS Property consistently delivers outstanding results for property owners and tenants alike.
Strategy. Delivered.
Lincoln McConnell‑Brown
Head of Asset Management and Senior Principal, CRS Property
