Regional commercial property hits $6.2 billion as investors look past the capitals

Knight Frank's Australian Regional View 2026 shows regional deals reached the third-highest level on record in 2025, led by retail. Geelong tops the population growth forecasts.

Regional commercial property transactions reached $6.2 billion in 2025, the third-highest level on record, according to Knight Frank’s Australian Regional View 2026. Investors now see many regional centres as growth markets rather than high-yield alternatives, driven by population growth, infrastructure spending and more diverse local economies.

Regional deals represented about 11% of all Australian commercial property transactions, with retail accounting for more than 40% of activity. The figures point to a fundamental shift in how regional markets are being assessed, driven by population decentralisation, infrastructure investment and economic diversification.

Knight Frank Senior Economist Alistair Read said investor perceptions had changed substantially over the past five years.

“Investors are increasingly recognising that many regional centres now possess the economic scale, population growth and industry diversity required to support long-term commercial property performance,” he said.

Population growth is driving regional demand

Population growth is emerging as one of the most significant demand drivers for regional commercial property. About 8.9 million Australians, or 32% of the population, lived outside capital cities in 2024–25, with that figure forecast to reach 9.6 million over the next decade.

Geelong is projected to lead growth with a 22% population increase over the next decade, followed by the Gold Coast at 19%, Wollongong at 16%, Townsville at 14% and Newcastle at 11%. This population growth is expected to drive increased demand for retail, office and industrial space across these regional centres.

For Victorian investors, Geelong’s position at the top of the list stands out. The city is linked to Melbourne’s western suburbs by the Princes Freeway and the Geelong rail line, so many Melbourne investors can inspect and manage property there without much difficulty. Our article on how regional Australia continues to attract city dwellers covers the residential side of that move.

Regional markets are becoming more specific

However, the regional story is becoming increasingly market-specific.

Newcastle is shifting beyond coal and heavy industry, with professional services, healthcare, education, tourism and advanced manufacturing expanding. Its industrial market is also benefiting from the Port of Newcastle, renewable energy investment and defence activity around RAAF Base Williamtown.

Wollongong is experiencing a similar transition towards service industries, with professional services and healthcare growth, the expanding University of Wollongong and the $2 billion BlueScope Land Transformation project at Port Kembla driving future commercial demand.

On the Gold Coast, rapid population growth and economic diversification are creating tight commercial conditions. A-grade office vacancy fell from 18.6% in January 2021 to just 3.2% in January 2026, with limited new supply expected to support rental growth.

Infrastructure and tourism add support

Infrastructure investment is also reshaping regional markets. Wagga Wagga has more than $15 billion in infrastructure projects earmarked for the city and surrounding Riverina-Murray region over the next five to 10 years, while Townsville is benefiting from $700 million in defence-related infrastructure investment.

Tourism is providing another tailwind, with total Australian tourism expenditure forecast to rise 22% to $233 billion by 2030, supporting retail, hotel and broader commercial activity in regional destinations. Luxury hotels are one part of the accommodation market already benefiting, as our report on luxury hotel investment in Australia shows.

“Regional can no longer be treated as a single property market,” the report said, with infrastructure, employment and industry diversification increasingly determining where commercial property demand is strongest.

What to check before buying regional commercial property

Knight Frank’s data shows why investors are paying attention. It also shows that results will differ from one centre to the next. Before you buy, look at:

• Local demand drivers. Population growth, major employers, infrastructure projects and industry mix in the specific town, not the region as a whole.
• The tenant and the lease. Tenant strength, lease length, rent review terms and who pays outgoings matter more in a smaller market, where replacing a tenant can take longer.
• Liquidity. Fewer buyers in a regional centre can mean a longer sale process when you want to exit.
• Asset type. Retail made up more than 40% of regional activity in 2025, but large format retail, neighbourhood shops, offices and industrial sites each carry different risks.
• Lender policy. Some lenders treat smaller regional towns more conservatively, with lower loan-to-value ratios or postcode restrictions.

Timing matters too. Our report on commercial property yields by city shows how returns compare, and shopping centres leading commercial investment covers the retail side. Read why some analysts think the commercial property market has reached an investment entry point and how essential service property has performed.

Financing a regional commercial property purchase

Lenders assess commercial property loans on the property, the lease and your financial position. Policies on regional locations vary more than they do for metropolitan property, so comparing several lenders can make a real difference to the loan size and terms available.

A broker can compare commercial property loan options across lenders that finance regional assets. Attain Loans is a finance broker in Melbourne’s west that works with commercial property investors in Victoria and beyond, subject to each lender’s assessment.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Consider whether it’s appropriate for you and speak with a licensed professional before making a decision.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.