As we move into 2026, I find myself less interested in forecasts and far more focused on the things that still don’t sit right.
After nearly two decades working across commercial property cycles, I’ve learned that the most dangerous moments are not when markets are clearly broken, but when they appear to be stabilising without resolving the issues that caused the instability in the first place.
There is no shortage of commentary suggesting parts of the market are finding their footing. The research departments of leading Australian Commercial Property Service providers will likely publish outlooks pointing to green shoots, selective recovery and improving liquidity.
And while some of that may be directionally accurate, it doesn’t fully reconcile with what I’m seeing on the ground.
From where I sit, this cycle feels unfinished.
What follows are not predictions or conclusions. They are the questions I keep coming back to the areas I am watching most closely, and struggling to get comfortable with, as 2026 begins.
Housing: The Question That Refuses to Go Away
Housing remains one of the most important issues facing both our industry and society, yet it is also the area where the answers feel the least convincing.
I remain genuinely puzzled as to how housing in Victoria across low, medium and high density, for sale and for lease is meant to be delivered at scale.
We all agree on the problem: supply shortages, population growth, rising costs, and thin construction pipelines. What is far less clear is the mechanism for solving it that go beyond summit after summit of intelligent people discussing ‘good ideas.’
A growing proportion of anticipated residential supply now appears to be pegged to Build-to-Rent. BTR has a role to play, but I find it dangerous that such a meaningful slice of future housing is reliant on:
- accepting low initial returns,
- elevated construction costs,
- rental markets that are not yet akin to premium rental markets in parts of the US or Europe,
- and global institutional capital driven by thematics and fund manager approval.
In my experience, most fund managers are not inclined to stick their necks out or bet against trend particularly in volatile geopolitical environments or rising rate cycles.
If momentum in BTR stalls, even temporarily, the housing solution stalls with it.
That is not a comfortable position to be in.
Global Volatility, Rates, and Capital That Can Hesitate
Overlaying all of this is an increasingly unstable global backdrop.
Geopolitical volatility and the prospect of higher-for-longer interest rates matter enormously for capital-intensive sectors that already require investors to accept thin margins.
BTR, large-scale residential development, and even parts of commercial development only work when capital remains patient and conviction is maintained.
My concern is not that capital disappears it rarely does but that it hesitates. And hesitation alone can derail projects that rely on uninterrupted momentum.
Outgoings: The Quiet Pressure Point
One issue I believe is materially underweighted in current market commentary is the impact of outgoings on real returns.
Utilities, insurance, council rates, compliance and statutory costs continue to rise, and forecasts for electricity pricing suggest further increases over the next 12 months.
This is not noise it is structural and it is not going away.
For many assets, particularly outside the very top end of the market, rising outgoings are quietly doing more damage to returns than vacancy or incentives ever could. Gross rent stories look increasingly hollow if net income continues to be squeezed.
Data and Logistics: Sound, but Hard to Access
Data centres and logistics remain fundamentally sound sectors. The challenge is not belief it’s access. They remain good ‘talking points’ on podcasts relating to buzz words such as thematics but in real terms those markets are very hard to access on scale.
Barriers to entry are high, pricing is tight, and genuine exposure is difficult to achieve without accepting significant competition or compressed returns and needing oodles of capital to roll the dice.
These sectors increasingly feel like fortified positions rather than obvious opportunity zones.
Healthcare: Where Operational Reality Still Matters
In contrast, the work we are doing through yourmedicalproperty.com.au continues to reinforce a view I’ve held for some time: operationally driven real estate tied to human necessity behaves differently.
Medical occupiers are active. Demand is real. Decisions are less sentiment-driven and more service-driven.
That doesn’t make healthcare property immune to risk, but it does anchor it in something tangible people needing care rather than capital chasing yield.
Credit: The Risk Beneath the Surface
I remain uneasy about the private credit market.
There is no shortage of anecdotal evidence suggesting non-bank lenders are sitting on stressed or underperforming loans that have yet to be fully addressed. At the same time, new lending continues, and in many cases needs to be examined very closely for genuine margin protection given the number of impediments facing development and value-add strategies.
I’m not calling a crisis but I am watching carefully.
Markets rarely reprice politely.
A Strange Contradiction: Sub-$15m Resilience
One of the more perplexing features of the current market is the continued strength of the sub-$15 million leased investment sector.
Fast food, fuel, childcare and medical assets remain extremely robust, with yields that appear to defy logic when viewed through the lens of debt costs and anticipated rate escalation.
Perhaps the explanation is simple: clarity, lease security and human necessity still command a premium even when the broader environment feels fragile.
Skill Will Decide Outcomes
If there is one area where my conviction is growing, it is this:
The next phase of this cycle will not reward passive ownership.
Structured transactions, vendor terms and joint ventures with landowners may become increasingly relevant but only where asset managers and developers genuinely understand operational, financial and tenant-side realities.
The days of buying an asset and relying on external consultants or real estate agents to complete the puzzle feel well and truly over.
Capital That Isn’t Coming Back — Yet
Mainland Chinese capital, once a dominant force, remains largely absent.
Yes, there is activity from locally based Chinese investors living in Australia, but the scale and influence of offshore mainland capital has not returned in any meaningful way.
Agriculture, by contrast, continues to attract very sophisticated capital following fundamentals rather than fashion. Self-storage remains a hyped concept for the sophisticated masses many of whom rarely participate in areas that make good conversational sense, with limited genuine exposure, and the dominance of Abacus who has executed exceptionally well through the Storage King platform.
Institutions such as Charter Hall continue to acquire sub-regional and smaller shopping centres at tight yields, often backed by fully leased income streams. Whether this reflects long-term conviction, population-driven optimism, or a desire to shore up internal book values remains an open question.
Office, CBDs, and the Absence of Answers
There are still no clear answers for:
- incentives outside of high-quality office assets,
- what to do with B and C grade buildings in the Melbourne CBD that are no longer fit for office use,
- why we have yet to see a meaningful CBD office-to-residential conversion,
- or how government intends to stimulate the off-the-plan market in any material way.
Add unresolved safety concerns and the deteriorating condition of parts of the Melbourne CBD, and it becomes difficult to argue that confidence alone will drive recovery.
Valuations and Forced Reality
Perhaps the most confronting issue is valuation honesty.
With so many $50m+ assets held tightly by fund managers and super funds, true price discovery has been limited.
Recent examples including ISPT’s divestments following the IFM takeover, where assets such as 206 Bourke Street traded materially below COVID-era book values raise an uncomfortable but necessary question:
If others were required to sell, for whatever reason, what is the real depth of demand, and at what price?
A Disciplined Start to 2026
For me, 2026 must begin very much as a wait-and-see year.
There will be deals to be done, but unless they are highly de-risked, or you are a passive investor comfortable sitting on low yields for low risk, there are no obvious moves that can be made with a high degree of confidence based on current fundamentals.
That may change. Or it may not.
Either way, this feels like a year where discipline matters more than decisiveness and where skill, not sentiment, will separate outcomes.
These are the uncomfortable questions I’ll be thinking about as 2026 unfolds.
Until next time,
Mark Wizel