The commercial property market is poised for a dynamic shift in 2025, with anticipated interest rate reductions expected to reignite transaction activity across all sectors. Private investors, armed with improved debt serviceability and renewed confidence, are likely to lead this resurgence. The expected easing of monetary policy should create a more favourable environment for leveraged buyers, potentially driving increased competition for quality assets as debt costs moderate.

The retail sector's rebound is expected to gain further momentum in 2025, with private investors strategically targeting metropolitan assets underpinned by strong trade area demographics and essential service offerings. Neighbourhood centres anchored by supermarkets, combined with healthcare services and daily needs retail, will likely remain highly sought after. The evolving tenant mix towards experiential retail and services is expected to further strengthen the sector's appeal, particularly in assets requiring strategic repositioning to capture changing consumer preferences.

The industrial sector continues to benefit from structural undersupply in key markets. Private investors are increasingly focusing on the smaller end of town such as industrial units and last-mile logistics facilities, particularly those with value-add potential. Owner occupiers will continue to be in competition for these assets with any downside risk limited.

2025 could mark a turning point for the office sector as the market finally adjusts to hybrid working patterns. Metropolitan assets with strong tenant covenants and modern amenities are attracting renewed interest, particularly buildings that have already undergone ESG upgrades. The flight to quality trend is expected to create opportunities for investors willing to reposition B-grade assets in strong locations, especially as occupiers seek better workplace experiences to encourage office attendance.

The smaller ticket alternative sector continues to attract private investor attention, with these assets offering compelling income security through structured rental growth. Childcare centres and service stations, delivering annual rental increases with long lease terms, remain highly sought after by yield-focused investors.

Private capital's agility and ability to move quickly on opportunities will become increasingly valuable as the market transitions to a more favourable lending environment. Lower debt costs, combined with stabilising values, should create favourable conditions for private investors to acquire assets with strong underlying fundamentals.

The strategic focus for private investors in 2025 will likely centre on assets offering both defensive income streams and clear repositioning potential, as improved debt serviceability drives renewed competition for quality assets. The ability to execute active management strategies and identify emerging sector opportunities will be key differentiators for successful private investors in the year ahead.