Commercial property can offer higher yields, longer leases and lower day-to-day management demands than residential investment, making it an increasingly attractive option for retail investors. While large property groups and investment funds dominate the commercial landlord market, several accessible pathways exist for smaller investors looking to enter the sector.

One popular model, particularly among business owners, is the self-managed superannuation fund. An SMSF can acquire business premises and lease them back to the associated business, though regulations require commercial properties to be leased at market rates — not discounted rates for related parties. Investors can also access the sector through Australian Real Estate Investment Trusts, commonly via Exchange Traded Funds that provide diversified exposure to a broad range of domestic and global real estate assets. Alternatively, investors can buy shares directly in ASX-listed property groups such as Dexus, Charter Hall and Abacus.

Mitch Witherow, senior negotiator at CBRE, said the current market presents opportunities for buyers, with properties that failed to transact in previous quarters remaining available at adjusted pricing. Capitalisation rates have softened across the board, ranging from 5 to 9 per cent depending on asset quality and location, with suburban strata offices typically at the higher end of that range. Witherow recommended targeting properties that are already leased with a long leasing period remaining, preferably with multiple tenants to reduce concentration risk. Vacant commercial properties can sit on the market for extended periods, particularly in suburban locations, making tenancy security a key criterion for retail investors.

Cameron Williams, Sydney CBD director in charge at Colliers, said a key advantage of commercial over residential investment is the reduction in day-to-day management demands. Commercial leases typically require tenants to cover outgoings, removing many of the operational headaches associated with residential property. However, strata office investments carry a different cost profile, as building costs including lifts and air-conditioning are the landlord's responsibility. Williams said these capital expenditure obligations can erode net returns over time and should be factored into investment modelling. Investors should also review comparable sales, proximity to public transport and planned infrastructure works near the property before committing to a purchase.