Commercial Finance & Property Market Update — October 2026

Glenclair Financial | Sydney and national market commentary, October 2026

The short version

The RBA raised the cash rate to 4.60% on 29 September 2026, its fourth increase this year, and inflation picked up again in August. Commercial property transaction activity has stayed strong through the third quarter, but higher funding costs and bond yields mean serviceability, not lender appetite, remains the main constraint for borrowers.

Rates and inflation

At its 29 September 2026 meeting, the Reserve Bank's Monetary Policy Board unanimously increased the cash rate target by 25 basis points to 4.60%, effective 30 September. The Board said inflation remains elevated, global energy prices are much higher than assumed in its August forecasts, and it will increase the cash rate further "if needed". It also noted that growth in business investment and debt is strong. (Source: RBA media release 2026-27, 29 September 2026.) The ABC reported this as the highest cash rate since late 2011. (ABC News, 29 September 2026.)

The next decision is due on 3 November 2026. (Source: ACT Treasury summary of the RBA decision.)

The ABS reported that CPI rose 4.0% in the 12 months to August 2026, up from 3.5% in July, while trimmed mean inflation was unchanged at 3.6%. Housing (up 5.7%) and transport (up 5.6%, driven by fuel) were the largest contributors. (Source: ABS, released 30 September 2026.) The September 2026 figures are scheduled for release on 28 October 2026.

What this means practically: borrowers with facilities maturing or under review in the next 12 months should plan around current rates, and allow for the possibility of further increases, rather than counting on relief.

Capital markets

MSCI data reported by realcommercial.com.au shows the total volume and number of commercial property sales in the first half of 2026 were 21% higher than the same period in 2025, despite three rate rises in that half. The same report expects the recovery to be tempered in the second half. (Source: realcommercial.com.au Commercial Property Update, September 2026.)

CBRE's estimate of the all-in cost of debt for prime office ranged from 5.00% to 5.70% during H1 2026, and the Australian 10-year bond rate ranged from 4.65% to 5.15%. (Source: CBRE Capital Edge Q3 2026.) CBRE has since reported that the 10-year bond rate rose by about 60 basis points during Q3 and settled at about 5.35%. (Source: CBRE Australia CBD Office Figures Q3 2026, 14 October 2026.)

Office

CBRE's Q3 2026 figures show Australian CBD prime effective rents rose 3.1% over the quarter and 8.1% over the year, which CBRE says is the strongest national rental growth since 2019. Office transactions reached $3.9 billion in Q3, with year-to-date volumes about 50% higher than the same period in 2025. Prime CBD yields averaged 6.70% and were largely stable. (Source: CBRE, 14 October 2026.)

Financing read-through: with bond yields higher and yields stable, the gap between property income and the cost of debt is thinner. Lenders will continue to focus on lease terms, tenant quality and interest cover. See our guide to commercial property loans.

Industrial: Sydney

Cushman & Wakefield's Sydney Logistics & Industrial MarketBeat for Q3 2026 reported vacancy rising modestly to 3.9%, about 290,000 sqm of gross take-up in the quarter (just over 1.0 million sqm year to date), and broadly unchanged prime net face rents, with incentives above 20% in several submarkets. Average land values for one-to-five-hectare lots were about $1,522/sqm in Western Sydney and about $3,225/sqm in South Sydney. (Source: Cushman & Wakefield, as reported by Prudential Finance, Q3 2026.)

Nationally, CBRE reported super prime industrial yields unchanged in Sydney during Q3 2026, with the national midpoint up five basis points to 5.81%, and year-to-date industrial transaction volumes already above the 2025 total. (Source: CBRE Australia Industrial and Logistics Figures Q3 2026.)

Retail

JLL reported $4.6 billion of Australian retail property transactions in Q3 2026, 98% above the ten-year average, and a record $16.3 billion over the 12 months to Q3. New South Wales recorded $4.8 billion over that period, behind Queensland at $6.2 billion. (Source: JLL, 20 October 2026.)

What we're watching for borrowers

• Serviceability buffers. Higher rates reduce borrowing capacity at the same income. Check interest cover and debt service ratios against your covenants now, not at review time.
• Refinance timing. Start early. Valuations and credit assessment take time, and outcomes are less predictable when rates are moving.
• Lease profile. For investors, extending good tenants before a refinance can matter more than the rate. See lease terms, WALE and tenant quality.
• Working capital. Rising costs tie up more cash. Review whether your facilities still match your cash cycle. See overdraft vs line of credit vs invoice finance.

Talk to us

Every file is assessed by the lender on its own merits. If you'd like a confidential review of your position, contact us at info@glenclair.com.au. For the basics, see commercial finance explained.

All figures are as published by the named sources on the dates shown and may since have changed. Glenclair Financial has not independently verified third-party data.