Melbourne is not just a cultural and residential hotspot; it’s also a thriving centre for commercial real estate. From bustling CBD office towers to sprawling industrial parks in the outer suburbs, Melbourne offers diverse opportunities for investors, business owners, and developers alike.
With rapid infrastructure development, population growth, and an evolving work culture, the city’s commercial landscape is undergoing a significant transformation. This guide explores key trends, property types, investment strategies, and the top-performing suburbs to help you navigate Melbourne’s booming commercial real estate market with confidence.
Understanding Melbourne’s Commercial Real Estate Market
What Defines Commercial Property?
Commercial real estate (CRE) refers to properties used exclusively for business purposes or income-generating activities. Unlike residential properties, which are lived in, commercial buildings are leased to businesses and organizations.
In Melbourne, commercial properties are broadly categorized into:
Office Spaces: High-rises in the CBD, mid-rise suburban buildings, and shared coworking hubs.
Retail Premises: Street-front shops, shopping centers, and showrooms.
Industrial and Logistics Properties: Warehouses, factories, and distribution centers.
Specialty Real Estate: Hotels, medical centers, educational institutions, and mixed-use developments.
Each type of commercial property serves different sectors and comes with its own demand patterns, yields, and risks. Investors are drawn to commercial real estate for its higher rental yields, longer lease terms, and tenancy stability, although it also involves more upfront capital and market volatility than residential property.
Melbourne stands out due to its well-organized commercial districts, solid economic base, and growing sectors such as tech, logistics, and healthcare, all of which drive consistent demand for business spaces.
Melbourne’s Key Commercial Zones and Infrastructure
Melbourne’s commercial zones are strategically planned and supported by robust infrastructure. The city is divided into key areas where different types of businesses flourish:
Melbourne CBD: This is the epicentre of business in Victoria. It hosts corporate headquarters, legal firms, financial institutions, and coworking spaces. High-rise office towers dominate the skyline, offering premium commercial spaces with top-tier amenities.
Southbank and Docklands: These are modern extensions of the CBD, popular for newer office buildings, tech startups, and riverside retail strips. They’re favored for their accessibility, design, and proximity to public transport.
Inner Suburbs: Suburbs like Carlton, Richmond, and Fitzroy house boutique offices, creative agencies, and consulting firms. These areas blend lifestyle and work, attracting businesses looking for culture-rich, energetic environments.
Industrial Corridors: Outer regions like Dandenong South, Laverton, and Thomastown are hubs for logistics, warehousing, and manufacturing. They are connected by major highways, ports, and freight lines, making them critical for supply chain operations.
Retail Precincts: Major commercial strips such as Chapel Street, Bourke Street Mall, and High Street are key retail zones attracting foot traffic and high consumer spending.
Melbourne’s integrated transport system, including trams, trains, highways, and the Port of Melbourne, plays a huge role in supporting these commercial zones, reducing commute times and improving the efficiency of business operations.
Current Trends in Commercial Real Estate (2024–2025)
Post-COVID Recovery and Office Space Demand
The global shift to remote work initially caused a major disruption in office leasing. Vacancy rates soared in the CBD during 2020–2022, with many companies downsizing or switching to hybrid models. However, 2024 has marked a turning point.
Demand for office space is making a slow but steady comeback. Companies are returning to physical offices to foster collaboration, build team culture, and enhance productivity. Hybrid work is now the norm, and this has driven demand for flexible office layouts, smaller floor plates, and shared amenities such as breakout zones and wellness areas.
Coworking spaces, especially in suburbs like Collingwood and South Melbourne, are thriving. Startups, freelancers, and satellite teams prefer the flexibility and community-driven model these spaces offer.
CBD landlords are responding by repositioning older buildings, offering incentives such as rent-free periods or fit-out contributions to attract tenants. The demand is now tilted toward Grade A buildings with sustainability features, smart tech, and post-COVID hygiene upgrades.
E-Commerce and the Rise of Industrial Warehousing
One of the biggest commercial real estate winners post-pandemic has been industrial property, driven by the exponential rise of e-commerce. Melbourne, as a logistics hub with proximity to ports and national highways, has become a prime location for fulfillment centers, last-mile delivery depots, and cold storage facilities.
In areas like Truganina, Laverton North, and Cranbourne West, industrial developments are booming. These suburbs offer large parcels of land, custom-built warehouses, and direct access to freight corridors. Rental yields for industrial properties in these areas can reach 6–8%, significantly higher than residential yields.
Logistics giants like Amazon and Australia Post are heavily investing in Melbourne-based infrastructure, signaling long-term confidence in the industrial market.
Investors looking for stable income and capital growth are increasingly turning to industrial assets as a hedge against market volatility and retail sector uncertainty.
Retail Sector Trends and Revitalization
Melbourne’s retail property market has been through ups and downs over the past few years. Lockdowns and online shopping trends hurt small retail stores, especially in the CBD. However, recovery is underway, especially in suburban retail strips and experiential shopping precincts.
Consumers are returning to local shopping, favoring cafes, specialty stores, and services that can’t be replicated online. Suburbs like Elwood, Essendon, and Camberwell are seeing increased demand for street-facing retail shops with good pedestrian access.
The “shop local” movement, combined with population growth in outer suburbs, is rejuvenating the retail property sector. Strip retail has become particularly attractive due to lower overheads, foot traffic, and community loyalty.
Meanwhile, retail property investors are diversifying, combining retail with services like fitness studios, medical centers, and even coworking hubs to ensure tenants remain viable.
Types of Commercial Property Investments in Melbourne
Office Buildings: CBD vs Suburban Markets
Office space is a cornerstone of Melbourne’s commercial property scene, and there’s a marked difference between CBD towers and suburban office markets.
CBD Office Buildings offer prestige, centrality, and access to top-tier amenities. They're home to global firms, law practices, and corporate headquarters. However, post-COVID, this segment has seen higher vacancy rates and increased leasing incentives. Despite these challenges, premium buildings (A-Grade) in the CBD are regaining traction as tenants seek out workspaces that enhance collaboration and wellness.
Investing in a CBD office is best suited for those with a long-term horizon, given the potential for strong appreciation once office demand fully rebounds. Expect lower yields initially, but greater capital gains in the future.
Suburban Offices, on the other hand, have grown in popularity. Areas like Box Hill, Dandenong, and Tullamarine are hotspots for decentralized work hubs. These locations offer lower rental rates, ample parking, and easier commutes, appealing to businesses that have adopted flexible or hybrid models.
Investors are drawn to suburban offices because of lower entry costs, strong demand from SMEs, and often higher rental yields (5–7%). As Melbourne’s infrastructure spreads outward, suburban office markets are becoming increasingly desirable.
Retail Outlets and Shopping Strips
Retail properties offer a wide spectrum of investment opportunities from small cafés on bustling corners to anchor stores in large shopping centres. However, the retail market is transforming, and understanding location, tenant mix, and consumer trends is key to success.
Shopping Strips like Chapel Street, Lygon Street, and Glenferrie Road remain vibrant due to their blend of retail, dining, and lifestyle services. These areas attract high foot traffic and are often situated near public transport, universities, and residential hubs.
Retail outlets benefit from longer leases, especially when tenanted by national chains or stable small businesses. Many investors prefer triple net leases, where the tenant is responsible for most property outgoings—making management easier and returns more predictable.
However, there are risks. Shifts in consumer habits, rising online sales, and increasing vacancy rates in the CBD mean retail investments must be strategically located and diversified.
Retail centres in emerging suburbs like Craigieburn, Point Cook, and Pakenham are seeing strong demand thanks to population growth, especially for convenience retail and services like dental clinics, beauty salons, and fast food outlets.
Warehouses and Industrial Complexes
Warehouses have become Melbourne’s commercial investment darling. With the rise of online shopping, just-in-time delivery models, and supply chain diversification, demand for industrial space has skyrocketed.
Industrial hubs like Laverton North, Derrimut, and Dandenong South are booming, and land in these corridors is being snapped up by developers and logistics companies. Investors benefit from:
High tenant retention
Strong rental yields (6–8%)
Low management demands
Long-term leases with annual rent escalations
Many warehouses are now custom-built, featuring tech integration, sustainability features, and advanced loading infrastructure. These enhancements attract blue-chip tenants like Amazon, Coles, and Toll Group, further stabilizing investment returns.
Additionally, cold storage facilities, essential for pharmaceuticals and food logistics, have become a hot sub-sector in Melbourne’s industrial landscape.
For those looking for a reliable, future-proof investment, warehouses and industrial estates in Melbourne’s west and southeast corridors offer some of the highest returns with comparatively lower volatility.
Top Commercial Investment Suburbs in Melbourne
Inner-City Business Hubs: Melbourne CBD and Southbank
When you think of commercial real estate in Melbourne, the CBD immediately comes to mind—and for good reason. It's the beating heart of Victoria’s economy, home to multinational corporations, high-rise office towers, luxury hotels, and flagship retail outlets.
The Melbourne CBD attracts investors because of:
Prestige location and international recognition
Government infrastructure spending on transport and connectivity
Tourism and hospitality drawcards
However, it’s not without risks. Vacancy rates in office towers remain elevated post-pandemic, and retail leasing can be volatile. That said, prices have softened slightly, creating buy-in opportunities for long-term investors banking on the city’s rebound.
Southbank, just across the Yarra River, is a modern business and residential precinct that blends corporate buildings with art, hospitality, and riverside attractions. It’s home to many tech startups, financial firms, and cultural institutions like the Melbourne Arts Centre and Crown Casino. Office and mixed-use developments here are particularly appealing to those looking to capitalize on lifestyle-oriented tenants and international visitors.
Both suburbs benefit from proximity to public transport, a skilled workforce, and Melbourne’s most iconic landmarks, making them safe, albeit premium-priced, commercial investments.
Emerging Growth Corridors: Dandenong, Sunshine, and Thomastown
If you’re seeking high-growth opportunities outside the city center, Melbourne’s outer suburban corridors are where the action is. These areas are undergoing significant urban transformation, fueled by infrastructure projects, industrial expansion, and strong population growth.
Dandenong South has evolved into one of Melbourne’s largest industrial hubs. The Dandenong Industrial Precinct attracts logistics, manufacturing, and warehousing businesses, offering high-yield investment opportunities in large-format properties. The area is supported by freight terminals, freeway access, and continued government investment.
Sunshine, located in the western suburbs, is benefiting from the Sunshine Super Hub project, which aims to turn it into Melbourne’s second major CBD. With a new metro tunnel connection and airport rail link planned, commercial land values here are expected to skyrocket. Small offices, retail shops, and development sites are all highly sought after.
Thomastown, in Melbourne’s north, combines industrial, retail, and small-office commercial assets. It’s a preferred location for tradespeople, auto businesses, and logistics operations due to its affordability and strategic location near the Metropolitan Ring Road.
These suburbs represent the next frontier of commercial investment—lower entry costs with strong upside potential driven by demand, demographics, and transport access.
Bayside and Port Districts: Fishermans Bend and Port Melbourne
The bayside commercial districts of Melbourne are unique in offering a mix of industrial, lifestyle, and residential elements. They cater to forward-thinking investors interested in urban renewal zones with long-term upside.
Fishermans Bend is one of Australia’s largest urban renewal projects, transforming former industrial land into a thriving mixed-use community. The area is poised to become a major employment hub, with a focus on innovation, sustainability, and transport integration. Office spaces, creative industries, and tech firms are expected to dominate, offering new commercial investment opportunities from the ground up.
Port Melbourne, already well-established, combines historic warehouses with modern offices and industrial showrooms. It’s a favorite among logistics and e-commerce firms thanks to proximity to the Port of Melbourne, Australia’s busiest seaport. The suburb is also gentrifying rapidly, leading to higher tenant demand in retail and hospitality.
These waterfront suburbs offer a rare blend of proximity to the CBD, industrial zoning, and long-term planning vision, making them standouts for savvy investors with a medium- to long-term outlook.
Advantages and Challenges of Commercial Real Estate
High Returns and Long-Term Leases
One of the biggest attractions of commercial real estate in Melbourne is the potential for higher returns compared to residential properties. Commercial tenants, especially in office, retail, or industrial sectors, often sign 3–10 year leases with built-in annual rental increases, giving landlords consistent income and long-term security.
Other financial advantages include:
Triple net leases, where tenants cover outgoings (insurance, maintenance, property taxes)
Higher rental yields, typically ranging from 5% to 8%
Depreciation and tax benefits, especially in new developments
Commercial properties also tend to appreciate over time, especially in high-demand suburbs or precincts earmarked for development. For institutional and experienced investors, commercial assets offer the ability to scale wealth faster than residential options.
Market Risks and Vacancy Rates
Despite the upside, commercial real estate is not without risks. The biggest challenge is vacancy—commercial spaces often take longer to re-let than residential, especially in changing economic climates.
Other risk factors include:
Tenant default or business closure
Changing consumer behavior, like e-commerce impacting retail
Interest rate fluctuations, which affect financing and investor sentiment
Overreliance on single tenants increases financial exposure.
Mitigating these risks involves tenant diversification, choosing assets with flexible floor plans, and investing in growing locations with multiple demand drivers (infrastructure, population growth, government spending).
Legal and Regulatory Considerations
Commercial leases in Melbourne are more complex than residential contracts. Each agreement must clearly define:
Lease term and renewals
Outgoings responsibility
Fit-out and maintenance obligations
Rent review mechanisms
It’s essential to work with a commercial property lawyer and an experienced agent when buying or leasing. Additionally, planning regulations can limit what types of businesses can operate in certain zones, so zoning compliance is a must.
Foreign investors also face stricter oversight from the Foreign Investment Review Board (FIRB) and must budget for additional taxes such as land tax surcharges and withholding obligations.
Due diligence is non-negotiable in commercial property. Successful investors treat it like a business, not just a passive income stream.
Conclusion
Melbourne’s commercial real estate market is rich with opportunity—from CBD office towers to booming industrial precincts and revitalized retail strips. Whether you’re a seasoned investor looking to diversify your portfolio or a business owner seeking your first commercial premises, understanding the nuances of location, property type, and market trends is essential.
With stable economic growth, strong infrastructure, and forward-looking urban planning, Melbourne remains a magnet for commercial property investment in Australia. While the risks are real, the rewards can be substantial—especially for those who do their homework, seek expert guidance, and take a strategic, long-term approach.
FAQs
1. Is commercial real estate in Melbourne a good investment?
Yes, especially in growth corridors and industrial sectors. Melbourne offers high rental yields, long lease terms, and strong capital growth in key areas.
2. What types of commercial properties are best for beginners?
Retail shops in suburban strips, small offices in growth areas, and industrial warehouses are popular entry-level investments with manageable risk.
3. What is the average yield on commercial property in Melbourne?
Yields vary by sector but typically range from 5% (office/retail) to 7–8% (industrial).
4. Can foreign investors buy commercial property in Melbourne?
Yes, but they must apply through the Foreign Investment Review Board (FIRB) and pay additional fees and taxes.
5. How do I finance a commercial property purchase?
You’ll need a higher deposit (usually 30%+), and commercial loans come with different criteria. Speak to a specialist commercial broker for tailored options.
