Darwins Commercial Property Market is Booming

The Northern Territory's commercial property market is experiencing significant growth, with Darwin emerging as a new hub for investors across multiple sectors. According to the latest LJ Hooker Commercial Market Monitor, Darwin's commercial property market is rebounding, supported by the NT's gross state product growing at nearly three times the national average, with a 4.6 per cent expanded economy in 2023-24. Strategic infrastructure projects have boosted Darwin's position as a major logistics and trade hub, driving demand across industrial, office, and retail sectors.

Prime industrial rents in the NT have jumped to $160-$180 per square metre, up from $130-$150 per square metre a year earlier, while secondary rents increased around 10 per cent to $100-$120 per square metre. In-demand industrial land in areas like Darwin's Berrimah is selling for $230-$270 per square metre, attracting significant interest from developers looking to capitalise on the region's growth.

Director of LJ Hooker Commercial North NT, Lee Doyle, said there is strong demand for premium industrial assets, primarily driven by logistics operators and defence contractors. "The e-commerce boom and the push for greater supply chain security are further increasing demand for warehouse and storage facilities," Doyle said. "With strong rental yields and limited supply, Darwin's industrial market continues to present excellent opportunities for investors."

The office sector is also performing exceptionally well, with Darwin recording the second-lowest A-grade vacancy rate nationally at 5.3 per cent, well below its 10-year average of 10.5 per cent. A-grade office rents have reached $750 per square metre, driven largely by government tenants, while B-grade rents have climbed to $450 per square metre due to spillover demand.

LJ Hooker Commercial director for North NT, Ryan Doyle, said growing interest in Darwin's strata office market from private investors and self-managed super funds seeking to expand their portfolios. "Compared to interstate markets, where strata office yields typically sit between 5 and 7 per cent, Darwin presents a compelling opportunity with higher returns and replacement cost upside," he said. "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 per cent."

The trend toward higher-quality properties is prompting owners of lower-grade office spaces to reassess their investment strategies. With C-grade vacancy rates sitting at 50 per cent, many landlords are upgrading assets to B-grade standards or converting them into student accommodation.

Darwin's retail sector remains stable despite broader economic challenges facing retailers nationwide. Suburban shopping centres and strip retail locations continue to attract tenants, with healthcare and service-based retailers increasingly replacing traditional fashion and food outlets.

Strip retail rents range between $300 and $400 per square metre, while shopping centres are commanding more than $1,000 per square metre, underpinned by government and service-sector tenants.

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