For investors of all sizes and levels of sophistication, commercial property provides a very attractive investment option.

Negative correlation with returns in other asset classes and high levels of transparency are attributes which can hold investors’ long-term interest in commercial property. However, as with any investment asset class, there are pitfalls to be avoided.

The following six tips will assist in successfully navigating the pitfalls to leverage the best attributes of commercial property.

After several years in the shadows, Australia’s commercial office market is showing clear signs of life. While headlines over the past few years have focused on hybrid work, elevated vacancies and rising interest rates, the fundamentals are now shifting – and astute investors are beginning to act.

Recent reporting from The Australian Financial Review points to a noticeable change in sentiment, with large CBD office towers posting their first price gains in three years and institutional capital re-entering the market. The evidence is mounting: the cycle is quietly turning – but it still comes down to location.

When it comes to investing in commercial real estate in Australia, most people believe they have to have upward of $1 million before they can purchase a property. The sheer size of capital outlay can prove prohibitive, but even if an investor can afford the outlay – it might be too hard to manage or provide too much concentration risk in one investment. This is where listed and unlisted real estate investments can be simpler and easier than direct property investment.

Listed and unlisted real estate investment trusts are merely a mechanism to pool investors, so that they might have a beneficial interest in a portion of a commercial property. Investors get a proportionate return of income, potential capital gain, and tax effectiveness depending on their situation. They have a further advantage over direct investing, as all the property management, banking arrangements, and accounting are handled by professional fund managers, and usually on more favourable terms. Trusts also quarantine risk, meaning there is no recourse to investors if there was a default on debt arrangements. 

While both investment types offer opportunities to grow your wealth, they come with different features, benefits, and risks. Unlisted investments can be further divided into open end (taking investment daily) or closed end funds like the Natgen Investment Trusts. Features can be summarised as below; 

Equity and currency markets have had a brutal week. Major equity indices around the world plunged as trade tensions escalated sharply. The S&P 500 dropped 6%, the Euro Stoxx 50 fell 4.6%, and the FTSE 100 closed 5.0% lower for the week—wiping out billions in value as investors tried to digest the implications of sweeping new tariffs and the risk of a full-blown trade war.

At the centre of the storm is the United States Government’s latest policy announcement introducing a 10% tariff on all US imports, with reciprocal measures escalating as high as 54% in some cases. China’s swift response—a 34% tariff on US goods, effective 10 April—has only amplified the uncertainty.

With global trade flows under pressure and financial markets struggling to reprice risk, investors are again searching for certainty.

Direct property stands out as a stabilising force.

Unlike equities, direct property doesn’t trade daily on sentiment. It is grounded in real-world fundamentals—tenants, leases, and physical assets that serve essential demand. Crucially, many sectors within direct property have low exposure to global trade shocks. The returns from medical centres, local convenience retail, self-storage, and suburban business parks are more closely tied to domestic drivers like employment, population growth, health spending and household formation, than to geopolitical flashpoints.

Historical data supports this. Research by Atchison and the Property Funds Association shows that over the long term, direct property delivers both solid returns and low volatility—an ideal mix when other assets are swinging wildly. Their analysis to 31 December 2022 shows Australian direct property produced average annual returns of 9.2% with volatility of just 2.7%. Compare that to Australian equities, which delivered a slightly lower 8.4% return but with five times the volatility (13.5%). A-REITs, despite being listed property, followed a similar path to equities with higher volatility.

Importantly, direct property is not just about income. For well-selected assets, capital growth plays a key role—particularly as cost-to-replace rises and rental demand strengthens. While REITs and listed markets feel the immediate impact of macro policy shifts like interest rate changes or trade moves, direct property values tend to move at a different pace, guided by supply, demand, and leasing fundamentals.

With equity markets now pricing in rising recession risk and investors facing a potential “deleveraging spiral,” as some analysts are calling it, capital preservation is back in fashion. Real assets—particularly direct commercial property—have long offered investors a steady, tangible anchor in their portfolio.

In uncertain times, where the outlook is as much about headlines as it is about fundamentals, it pays to hold assets that are decoupled from day-to-day sentiment. Direct property doesn’t just provide diversification—it provides refuge.

Most people assume that once a commercial property is acquired, the hard work is done – tenants move in, rent is collected, and the investment takes care of itself. In reality, maximising returns requires an ongoing, proactive approach. This is where active property management comes in.

What is Active Property Management?

Active property management goes beyond basic rent collection and maintenance. It involves continuously monitoring and optimising a property’s financial and operational performance. For Natgen, this means leveraging in-house expertise to enhance tenant satisfaction, maintain asset value, and drive long-term income growth. Whether it’s a retail shopping centre, an office building, or a specialised medical facility, each asset requires a tailored strategy to meet both investor objectives and market demands.

Why is Active Management Important?

Commercial real estate represent tangible, real assets that are influenced by economic conditions, tenant performance, and evolving market needs. Without active oversight, properties can quickly lose value due to poor tenant retention, ongoing vacancies, escalating operational costs, or building degradation.

For retail assets like shopping centres, ensuring the right tenant mix and optimising customer experience are key to increasing foot traffic and sales. Longer dwell times lead to stronger tenant performance, which in turn improves lease renewal rates and asset stability.

In office buildings, active management helps maintain occupancy by responding to evolving tenant needs, such as flexible leasing structures or upgraded amenities. With hybrid work models more common, landlords must adapt to stay competitive, and may introduce 3rd spaces such as shared meeting rooms or end of trip facilities to increase tenant satisfaction.

Specialty assets, like medical centres, require careful management of regulatory requirements, patient accessibility, and operational efficiencies. Ensuring a well-maintained, safe, high-quality environment directly impacts the viability of tenants such as healthcare providers, who rely on a stable setting to deliver essential services.

The Natgen Approach

At Natgen, we have a hands-on, strategic approach to property management. Our dedicated in-house team works closely with tenants, contractors, and key stakeholders to enhance asset performance. Where external property managers are engaged, our internal experts remain involved—conducting regular inspections, setting strategic goals, and ensuring alignment with each Trust’s financial objectives.

Natgen’s proactive management means identifying opportunities before they become challenges. From energy-efficient upgrades to negotiating lease renewals well in advance, our focus is on preserving and growing value for investors. Close tenant relationships, regular financial reviews, and data-driven decision-making by our property experts are core to our methodology.

By actively managing assets throughout their lifecycle—planning, acquisition, operation, and eventual sale—Natgen ensures each property remains competitive, profitable, and aligned with long-term investment goals. This level of engagement is what sets us apart in the industry, and delivers consistent results for Natgen investors.