10/09/2026
A higher yield is not automatically a better commercial property investment.
We're seeing a lot of investors and residential buyer's agents, often whose pipelines have tightened, moving into commercial right now, largely for cash flow. It's an understandable step: in commercial, the tenant generally pays close to 100% of the outgoings, so a quoted net yield of 6–7% is a genuine return, rather than a gross figure eroded by costs.
But the "paper" yield is where many first-time commercial buyers get caught.
A higher yield usually reflects higher risk, thinner tenant demand, higher vacancy, or a weaker lease and tenant covenant. Compare a ~7% regional asset with a ~5% net asset in a low-vacancy capital city. Factor in a possible vacancy, the letting-up period and the costs of carrying an empty asset, and over a ten-year hold the lower-yielding, better-located property will more often than not come out in front on fundamentals.
If you're weighing a commercial purchase, it pays to look past the headline number.
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