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With , your estimated returns align with current market conditions. Industrial properties typically offer appreciation, while multi-family provides steady income. Consider your risk tolerance and market focus.
When people think about making big money in real estate, they often picture luxury homes or flipping houses. But the real cash isn’t in single-family dwellings-it’s in commercial real estate. Not every type of commercial property pays the same, though. Some generate steady income for decades. Others spike in value overnight when a tech giant moves in. So where’s the most money?
Industrial Warehouses Are Winning Right Now
If you’re looking for the highest returns in 2025, industrial warehouses are the clear leader. This isn’t just a trend-it’s a structural shift. E-commerce isn’t slowing down; it’s accelerating. Amazon, Alibaba, and even small online retailers need space to store, sort, and ship goods. That means demand for modern logistics centers is through the roof.
Class A industrial buildings in major metro areas like Sydney, Melbourne, Brisbane, and even regional hubs like Geelong and Wollongong are leasing at record rates. Tenants are signing 10- to 15-year leases with built-in rent increases. Cap rates? They’re hovering around 5% to 6%, which is low for commercial property-but that’s because prices have climbed so high. The real profit comes from appreciation. A warehouse bought for $8 million in 2020 is now worth $14 million in 2025. That’s a 75% gain in five years, not counting rental income.
And it’s not just big cities. Even smaller industrial parks near highways and ports are seeing double-digit annual rent growth. Investors who bought land in 2022 and built a 50,000-square-foot warehouse now have tenants lined up before construction even finished.
Multi-Family Residential (Class B & C) Is a Quiet Giant
You might think apartments are just for residential investors. But in commercial real estate, multi-family buildings with five or more units are classified as commercial assets. And they’re one of the most reliable income generators.
Why? Because housing demand isn’t going away. Renters aren’t just students or young professionals-they’re families, retirees, and remote workers who can’t or won’t buy. In Sydney, over 40% of households rent. That’s a huge, stable market.
Class B and C multi-family properties (older buildings, less flashy, but well-maintained) offer the best balance of cash flow and risk. They don’t get the flashy headlines like luxury condos, but they pay consistently. A 20-unit building in Parramatta or Blacktown might rent for $3,000 a unit per month. That’s $60,000 monthly income. After expenses, property management, and taxes, net cash flow is often $25,000 to $35,000 a month. That’s $300,000 to $420,000 a year from one asset.
And unlike retail or office space, you don’t need a single tenant to keep it running. If one unit goes vacant, nine others still pay. That’s diversification built in.
Office Space? Only If It’s Right
Office space got a bad rap after the pandemic. And yes, many older buildings are struggling. But here’s the truth: not all offices are equal.
Class A office towers in central business districts with modern amenities-high-speed elevators, green certifications, rooftop terraces, and on-site cafes-are still in demand. Companies like Atlassian, Canva, and KPMG aren’t working from home full-time. They want collaboration spaces that attract and retain top talent.
What’s changing? Tenants want flexibility. They’re signing shorter leases-3 to 5 years instead of 10. They want mixed-use buildings with retail on the ground floor. And they demand sustainability. A building with a 6-star Green Star rating can command 15% higher rents than one without.
Don’t buy a 1980s concrete box with no elevators and no natural light. But if you find a well-located, recently upgraded office in Melbourne’s CBD or Brisbane’s South Bank, it’s still a solid long-term hold. The key is condition, location, and tenant quality.
Retail Is Getting Tough-Unless You Know Where to Look
Shopping malls? Dead. Big-box retail? Struggling. But corner stores, medical centers, and neighborhood shopping strips? Still thriving.
People still need groceries, pharmacies, hair salons, and gyms. These are essential services. Tenants in these spaces sign long leases because they can’t afford to move. A pharmacy in a suburb like Chatswood or Campbelltown might pay $100,000 a year in rent for 1,200 square feet. That’s a 7%+ cap rate.
What’s working now? “Neighborhood retail.” Small strips with 5 to 10 tenants, anchored by a supermarket or medical clinic. These are less affected by online shopping because they offer convenience and immediacy. Investors who bought these in 2020 are now seeing 8% to 10% annual returns, even after rising interest rates.
Stay away from standalone big-box stores. Avoid malls without foot traffic. But if you find a well-located strip center with a Coles or Woolworths as an anchor, you’ve got a cash machine.
Specialty Properties: Data Centers, Medical Offices, Self-Storage
Some commercial property types fly under the radar-but they’re where the smart money is going.
Data centers are booming. Every app, video stream, and AI tool needs servers. Companies like Equinix and AWS are leasing space in Sydney and Melbourne at premium rates. A single data center can cost $50 million to build, but leases often run $200+ per square foot annually. That’s not for everyone-but it’s where institutional investors are putting billions.
Medical offices are another quiet winner. Doctors, dentists, and physiotherapists need space, and they don’t move often. A 5,000-square-foot medical suite in a growing suburb like Penrith or Sunshine Coast can rent for $150,000 to $200,000 a year. Tenants sign 5- to 10-year leases. Vacancy risk? Low. Rent growth? Steady.
Self-storage is the sleeper hit. With more people moving, downsizing, or just having too much stuff, demand is up. A 100-unit self-storage facility in Adelaide or Perth can generate $500,000+ in annual revenue with minimal staffing. Operating costs are low. And occupancy rates are consistently above 90%.
What to Avoid
Not all commercial property is a winner. Here’s where you risk losing money:
- Old retail malls without anchors or foot traffic
- Class C office buildings with outdated systems and no upgrades
- Single-tenant net lease properties with a failing tenant (like a struggling restaurant chain)
- Properties in declining suburbs with falling population or job losses
The rule of thumb: if the tenant can’t afford to move, they’ll pay. If the building doesn’t serve a basic human need, it’s risky.
How to Get Started
You don’t need $10 million to enter commercial real estate. Here’s how to begin:
- Start small. Look for a 4- to 6-unit multi-family building. These are easier to finance and manage.
- Work with a commercial broker who specializes in your target asset class. Don’t use a residential agent.
- Run the numbers. Calculate cap rate (net operating income ÷ purchase price). Aim for 6% or higher.
- Check tenant credit. Are they a national chain? A government agency? A well-known local business?
- Look for properties with upside. Maybe the roof needs replacing, or the parking lot is cracked. Fix those, and you raise the value.
Commercial real estate isn’t about luck. It’s about location, tenant quality, and asset condition. The money isn’t in the flashy deals-it’s in the steady, smart ones.
What’s Next?
By 2027, automation and AI will reshape logistics even further. Industrial space near airports and ports will become even more valuable. Medical offices will expand into telehealth hubs. Self-storage will integrate smart tech for app-based access.
The winners won’t be the ones chasing hype. They’ll be the ones who understand the fundamentals: cash flow, tenant stability, and long-term demand. If you’re looking for where the most money is in commercial real estate right now, look where people live, work, and shop-and make sure the building serves a real need.
What type of commercial property has the highest ROI right now?
Industrial warehouses currently offer the highest ROI in 2025, especially in major Australian cities and near transport hubs. Rising e-commerce demand has pushed rental yields up and vacancy rates down. Cap rates are low (5%-6%) because prices are high, but appreciation over the past five years has averaged 15% to 20% annually in top markets.
Is retail commercial property still profitable?
Yes-but only specific types. Large malls and standalone big-box stores are struggling. However, neighborhood retail strips anchored by supermarkets, pharmacies, or medical clinics are thriving. These properties benefit from consistent foot traffic and long-term leases from essential service providers, often delivering 7% to 10% annual returns.
Can you make money in office space in 2025?
Absolutely, but only in Class A buildings with modern amenities, strong sustainability ratings, and high-quality tenants. Older, poorly maintained offices are losing value. The best opportunities are in central business districts where companies still need collaborative spaces for hybrid work. Leases are shorter now (3-5 years), but rents are higher for upgraded spaces.
What’s the minimum investment to enter commercial real estate?
You can start with as little as $500,000 to $1 million by buying a small multi-family building (5-10 units) or a single-tenant retail strip. These are easier to finance and manage than large industrial or office towers. Many investors begin here to build experience before moving into larger assets.
Should I invest in self-storage or data centers?
Self-storage is accessible to individual investors and offers strong returns with low operating costs-ideal for beginners. Data centers require millions in capital and specialized knowledge, making them better suited for institutional investors or REITs. If you’re starting out, self-storage is a smart, lower-risk entry point.
