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The Reserve Bank of Australia (RBA) continued to hold the cash rate at 3.60% in November 2025, after three cuts earlier this year. However, the outlook for further easing has dimmed as inflation has begun to rise again, with core inflation edging towards the top of the RBA’s target band, prompting the central bank to signal a more cautious approach going forward.
For commercial property, this matters. Borrowing costs flow through to landlord expenses, which can influence rents and operational costs for tenants. And while rates are no longer climbing, cost pressures in the sector haven’t gone away.
According to KPMG’s mid-year insights on inflation and cost dynamics, parts of the commercial property market are showing signs of recovery:
* Industrial/logistics: strong demand, very low vacancies.
* Prime offices: attracting tenants with quality, sustainable features.
* Neighbourhood retail: gradually stabilising.
Despite these improvements, cost pressures remain. KPMG notes that materials, labour and energy costs are still elevated, which could keep some rents and operating costs steady or rising.
For SMBs, it’s a smart time to reassess lease terms, budget for potential rent shifts and model different cash flow scenarios. These steps can help protect margins and improve negotiating power in a market that’s still shifting.
#accountant #tax #business
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