Commercial Property Finance Is Making a Comeback
After a challenging period marked by rising interest rates, office market uncertainty, and tighter credit conditions, commercial property finance is staging a recovery in 2026. Declining rates, improving cap rate spreads, and renewed investor appetite are bringing deals back to the market. Here's what investors should know.
Why Commercial Is Gaining Momentum
Rate Relief
Commercial lending rates have fallen in line with the RBA easing cycle. While commercial loans are priced differently from residential (usually at a margin above bank bill swap rates), borrowers are seeing meaningful reductions in their interest costs, improving cash-on-cash returns for income-producing assets.
Industrial and Logistics Leading the Way
Industrial and logistics properties — warehouses, distribution centres, and last-mile facilities — continue to outperform. Vacancy rates in this sector remain extremely low, driven by e-commerce demand and supply chain diversification. Finance for quality industrial assets is relatively accessible compared to other commercial property types.
Retail Selective Recovery
Neighbourhood and convenience retail (think supermarket-anchored centres, medical centres, and service-based tenancies) is performing well, supported by population growth and non-discretionary spending. Finance for these assets is available and increasingly competitive. CBD retail and large-format retail remain more challenging to finance.
Office: Still Cautious
The office market remains bifurcated. Prime-grade CBD offices with strong tenancy profiles are transacting, and finance is available for quality stock. However, secondary office buildings with high vacancy or short WALE (weighted average lease expiry) face significant headwinds in both valuation and lending appetite.
Key Differences in Commercial Lending
- LVR limits are lower: Commercial loans typically max out at 65–70% LVR, compared to 95% for residential
- Assessment is income-driven: Lenders focus on the property's net income (WALE, tenancy quality, lease terms) not just the borrower's personal income
- Interest-only is common: Most commercial investment loans are structured as interest-only, with balloon repayments at loan maturity
- Non-bank lenders are active: Many of the most competitive commercial lending deals in 2026 are being written by non-bank lenders and private credit funds
What Should Investors Do?
If you're looking to enter or expand in commercial property, the current environment offers improving conditions. The key is matching the right asset class to the right lender. Loan Rocket has access to a wide panel of commercial lenders including banks, non-banks, and private credit providers. Speak with us to explore your options.