Is now the right time to buy commercial property? Commercial property: why now, and why due diligence decides the deal

After a few years of higher interest rates and caution, commercial property is back on investors' radar. The question we hear most at Palise Property is simple: is now the right time to buy?

The honest answer is that the market is improving. But whether it's the right time depends much more on the asset than on the calendar.

What the data says

The Reserve Bank's March 2026 Financial Stability Review found that commercial property fundamentals improved in most markets during 2025. Valuations rose, and demand for prime office space pushed rents up. The RBA also found little evidence of financial stress among commercial property owners. Banks' problem commercial property loans are low by historical standards.

Lenders are still active. APRA figures show that banks and other deposit-taking lenders held $487.6 billion of commercial property loans and exposures in March 2026, up 8.7 per cent on a year earlier.

Some sectors also have long-term demand behind them. ABS data released in August showed that investment in buildings and structures rose 2.1 per cent in the June quarter. Data centre and renewable energy projects were part of the reason, even though total private business investment fell 3.6 per cent over the quarter.

Policy is also part of the picture. Recent federal budget changes to residential negative gearing and capital gains tax have put commercial property back on some investors' radar. The details and timing matter, so get tax advice before making decisions based on them.

That's a positive backdrop, but it isn't a green light for everything. National figures won't tell you whether a particular tenant will renew. They won't tell you whether the outgoings in a sales brochure are accurate. And they won't tell you whether a lease really lets you recover the costs you think it does.

Why timing is the wrong first question

In residential property, a rising market can hide a lot of mistakes. Commercial property is less forgiving. The asset's value depends on its income, and the income depends on the tenant, the lease and the true cost of holding the building.

Two properties in the same suburb with the same advertised yield can perform very differently. One might have a secure tenant, a long lease and outgoings the landlord can recover. The other might have a lease ending in 18 months, costs the landlord can't recover and a building that needs capital works.

So instead of asking whether now is the right time, investors should ask a different question. Is this the right asset, at the right price, with the income I've been told it has?

Where deals are won or lost: due diligence

That's why due diligence is at the centre of how Palise Property buys commercial property. Once a client has a property under contract, our dedicated commercial due diligence team reviews it in detail.

Every report checks the basics against source documents, not the marketing: purchase price, building size, rent and return. For buildings with more than one tenant, we test the net return against the current rent records rather than the advertised figures. We also compile the outgoings and check them line by line.

We review leases in-house as well. This deliberately overlaps with the client's solicitor rather than replacing them. Sometimes the lease disclosure statement and the lease disagree about which outgoings the landlord can recover. When that happens, we flag it, because the difference comes straight out of the investor's net income.

We set out each issue as a key consideration: what the problem is, what needs to happen and who is responsible. That might be the solicitor, the lender, the vendor or the client. Reading plans and checking measurements stays with experienced people, and every report goes through a strict senior review before the client sees it.

The aim isn't to scare buyers off. Flagging too much damages trust just as much as missing something important. The aim is to give investors a clear, prioritised picture, so they can go ahead, renegotiate or walk away with confidence.

Looking beyond the immediate market

This same approach, asset-first, due diligence-led is why Palise Property has recently expanded its services into New Zealand. The fundamentals we look for in a good commercial asset don't stop at the border, and the process for testing them shouldn't either.

So, is now the time?

For well-prepared investors, conditions are better than they've been for some time. Fundamentals have improved, lenders are still active and some sectors have real demand.

But the opportunity goes to buyers who do the work:

• Know your borrowing capacity and strategy before you start looking.

• Treat an advertised yield as a starting point, not a fact.

• Make sure someone on your side has tested the lease, the tenant and the outgoings before you commit.

Steve Palise unpacks this in more detail here: https://www.smartpropertyinvestment.com.au/investor-strategy/28174-yields-rates-and-due-diligence-what-investors-need-to-know-about-commercial-property. Palise Property has secured more than 1,000 residential and commercial properties worth over $1 billion and is Australia's most-reviewed commercial buyers agent on Google, with 700+ five-star reviews.

Thinking about investing in commercial property? Book a FREE strategy call with Palise Property's commercial team at https://www.paliseproperty.com/

This article is general information only. It doesn't take into account your objectives, financial situation or needs. Get independent financial, legal and tax advice before making investment decisions.

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