Darwin’s commercial property market has remained buoyant on the back of the Northern Territory’s Gross State Product performing at three times the national average, the latest LJ Hooker Commercial Market Monitor shows.

On the back of the growth, the Monitor has shown how strategic infrastructure projects have cemented the city as a critical logistics and trade hub; a flight to quality in the office market, encouraging B and C-grade office landlords to upgrade or reposition assets; suburban retail properties are attracting budget-conscious tenants.

The NT’s GSP expanded by 4.6% for 2023-24, well above the national average of 1.7%.

The Monitor found prime industrial rents climbed to $160-$180psm, up from $130-$150psm the year prior, reflecting strong tenant demand. Secondary rents rose circa 10% to average $100-120psm.

Industrial land in sought-after areas like Berrimah is attracting developers, with sale prices ranging from $230 to $270psm.

“We are seeing sustained demand for high-quality industrial assets, particularly from logistics operators and defence contractors,” said Lee Doyle, Director of LJ Hooker Commercial North NT. 

“The e-commerce boom and the push for greater supply chain security are further increasing demand for warehouse and storage facilities. With strong rental yields and limited supply, Darwin’s industrial market continues to present excellent opportunities for investors.”

The Monitor showed Darwin’s A-Grade office market held the second-lowest vacancy rate in Australia at just 5.3%, well below its ten-year average of 10.5%. Government tenants are driving demand, pushing A-Grade rents to $750psm, while B-Grade office rents have risen to $450 per sqm due to spillover demand. 

Fellow Director of LJ Hooker Commercial North NT, Ryan Doyle, said: “Our strata office market continues to attract strong interest from self-managed super funds and private investors looking to diversify their portfolios”.

“Compared to interstate markets, where strata office yields typically sit between 5% and 7%, Darwin presents a compelling opportunity with higher returns and replacement cost upside. The combination of strong yields and relative affordability makes these assets particularly appealing, especially when compared to the residential market, where yields often fall below 5%.”

The flight to quality has forced lower-grade investors to review their investment strategies. With C-Grade office vacancy rates at 50%, landlords are repositioning assets by upgrading to B-Grade standards or converting them into student accommodation to meet a growing demand for housing options. However, mooted changes to student visa rules by the Federal Government will lead to a more cautious investment landscape in the lead up to the election, expected in the first half of 2025.

Despite economic headwinds, Darwin’s retail sector remains stable, particularly in suburban shopping centres and strip retail locations. Healthcare and service-based retailers are replacing traditional fashion and food retailers, while strip retail rents at $300-$400psm are attracting cost-conscious tenants. Shopping centre rents exceeding $1,000 per sqm are being supported by government and service-sector tenants.