Published 28 September 2026. Figures and market conditions described here were current at that time and may have changed since.
Regional commercial property transactions reached $6.2 billion in 2025, marking the third-highest level on record as investors increasingly view regional centres as growth markets rather than simply high-yield alternatives.
According to Knight Frank's Australian Regional View 2026, regional deals represented about 11 per cent of all Australian commercial property transactions, with retail accounting for more than 40 per cent 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 emerging as one of the most significant demand drivers for regional commercial property. About 8.9 million Australians, or 32 per cent 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 per cent population increase over the next decade, followed by the Gold Coast at 19 per cent, Wollongong at 16 per cent, Townsville at 14 per cent and Newcastle at 11 per cent. This population growth is expected to drive increased demand for retail, office and industrial space across these regional centres.
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 per cent in January 2021 to just 3.2 per cent in January 2026, with limited new supply expected to support rental growth.
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 per cent to $233 billion by 2030, supporting retail, hotel and broader commercial activity in regional destinations.
"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.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
