AI Reshapes Australian Commercial Real Estate by 2035

July 15, 2026 - 03:12

Artificial intelligence is set to transform Australian commercial real estate over the next decade, affecting everything from office towers to warehouses and shopping centers. Industry analysts project that by 2035, AI will fundamentally alter how property is valued, used, and managed across the country.

In the office sector, AI-driven automation is expected to reduce demand for traditional workspace. Companies may need 20 to 30 percent less floor area as remote collaboration tools and AI assistants make physical presence less necessary. However, premium buildings with advanced digital infrastructure could see higher rents as tenants seek spaces equipped for AI-enhanced operations.

Logistics and industrial property stand to gain the most. AI-powered supply chain optimization will increase demand for modern warehouses near major transport hubs. Automated sorting systems and robotic inventory management require specialized facilities with higher ceilings, stronger floors, and better connectivity. This could push vacancy rates in older industrial stock higher while new builds command premium prices.

Retail property faces a mixed outlook. AI personalization might revive physical stores by creating tailored shopping experiences, but only for landlords willing to invest in sensor networks and real-time data analytics. Strip malls and centers without digital upgrades risk obsolescence.

The living sector, including build-to-rent and student housing, will see AI manage energy use, security, and maintenance. Properties with smart building systems could achieve lower operating costs and higher tenant satisfaction, making them more attractive to investors.

AI will not replace human decision-making in property but will accelerate the divide between technologically advanced assets and those left behind. Investors and developers who adapt early are likely to capture the strongest returns in this shifting landscape.