Over recent years, Western Australia’s residential property market has dominated the investment conversation. But as residential conditions shift, some investors are turning towards commercial property, Realmark Commercial managing director John Percudani, told COMMO.
With residential growth recalibrating, investors are taking a closer look at commercial assets, reassessing income potential, risk and long-term portfolio performance. According to Realmark Commercial managing director John Percudani, this is not necessarily a retreat from residential property. It reflects a more considered approach to where value can be found. Recent Arealytics data for the first half of 2026 shows that pricing and yield trends are already diverging across Perth’s commercial sectors.
Mr Percudani told COMMO the question is no longer simply which market is performing best, but which assets have the fundamentals to perform well through changing conditions. Drawing on Realmark’s on-the-ground market insights, a broader shift in investor sentiment is beginning to emerge. However, the commercial market is made up of different sectors.
Realmark is seeing sustained interest in industrial property, particularly well-located assets supported by strong occupier demand and limited availability. Yet competition for quality investments is also placing pressure on yields. For investors, Mr Percudani said, this makes lease security, tenant quality and future rental growth increasingly important considerations.
Arealytics told COMMO “Perth’s industrial property market continues to demonstrate strong underlying fundamentals, with rising asset values and tightening investment yields reflecting sustained competition for quality stock.” The company’s figures show “median industrial sale rates climbed 13.5% year-on-year to $3,449/m² in H1 2026, while average yields compressed from 5.1% to 4.6%.”
Arealytics also notes that “limited availability of well-located industrial assets, elevated replacement costs and continued demand from logistics and warehousing occupiers are supporting capital values.” However, it says, “as yields tighten, investors are increasingly reliant on rental growth, tenant covenant strength and lease security to underpin future returns. With development constraints expected to persist, established industrial assets with strong income fundamentals remain well-positioned.”
Retail presents a different opportunity. Perth’s neighbourhood and convenience centres continue to attract demand from essential services, food and beverage, medical and everyday operators. Well-positioned centres with a relevant tenancy mix and established catchment offer compelling fundamentals.
According to Arealytics, “Perth’s retail property market is revealing a different investment dynamic, with pricing trends increasingly diverging between asset types.” It reports that “freestanding retail recorded a 14.5% annual increase in median sale rates to $4,653/m² in H1 2026, accompanied by yield compression of 120 basis points to 4.4%. Shopping centres experienced more moderate price growth of 5.8%, with average yields expanding to 5.7%.”
Arealytics says this divergence “reinforces the importance of asset selection as investors assess income security, tenancy mix and opportunities for rental growth. Population growth, household spending and demand for convenience-based retail are expected to support well-positioned assets, although investment performance will increasingly depend on individual property fundamentals rather than broader market momentum.”
Meanwhile, elevated construction costs and constrained development pipelines are influencing the outlook for office and other commercial assets, potentially strengthening the position of existing, well-performing properties.
“What we’re seeing is not a uniform upswing, but a market becoming increasingly selective,” Mr Percudani said. “Commercial investment demands a different assessment of value. Lease structures, tenant covenants, vacancy exposure and capital requirements can influence returns as significantly as the purchase price.”
He said Realmark’s asset management leaders reinforce that performance extends well beyond acquisition. “Proactive leasing, tenant relationships and ongoing asset strategy are central to protecting income and sustaining long-term value. The quality of an investment is determined not only by what is purchased, but by how effectively it is managed through changing market conditions.”
“For investors, the more relevant question is not whether commercial property will outperform residential, but whether an individual asset offers the right balance of income, risk and long-term value,” Mr Percudani said. “This requires looking beyond headline yields to understand the strength of the tenancy, the resilience of the income stream and the opportunities to enhance performance over time.”
Mr Percudani said WA is emerging from a unique period in its property cycle. “As yield, tax changes and growth rates recalibrate, investment decisions are becoming less about following market momentum and more about recognising where sustainable value and return exists,” he said. “The opportunity is not defined by market direction alone. It is shaped by the quality of the asset, the strategy behind it and the experience brought to the decision.”
This article was originally published on COMMO.