Regional Victoria’s commercial property is on the rise. But what’s driving this growth?
Recent data from the Real Estate Institute of Victoria (REIV) has put regional residential property values up by 3.8 percent. As a result of this market growth, more Victorians are choosing regional locations for lifestyle, affordability, employment, or education.
With the population boom, improvements in infrastructure investment, industry expansion, and public transportation are also expected to follow in coming years, both to elevate quality of life for regional residents and continue to encourage migration to regional towns. People are staying, too. Shepparton’s vacancy rate sits at roughly 1 percent, well below the rate of big cities like Melbourne.
These new households don’t exist in a bubble. As the population living in regional Victoria grows, so does demand for local businesses and services. Commercial properties are also becoming increasingly more valuable, and the two markets continue to feed into one another.
Metropolitan vs. Regional Commercial Property Investments
For commercial property investors, regional markets offer lower costs of entry, both with regards to property values and loan amounts as well as additional costs like commercial property insurance. Lower property values also facilitate higher initial rental yields for commercial investors building regional portfolios, whereas higher-cost metropolitan properties might not generate profitability as readily due to heftier loan amounts.
The only downside to regional commercial properties has been a reduced tenant pool. Metropolitan commercial properties in highly sought after urban pockets can maintain long-term tenancies, delivering consistent yields, whereas regional properties may be susceptible to higher vacancy periods.
With recent regional population growth trends, however, and more regional markets like the Goulburn and Murray Valley being recognised for their local small business landscape, long-term commercial tenancies are becoming a very strong possibility for commercial property investors with a discerning eye.
Diverse Growth Across Regional Commercial Markets
Industrial and warehouse spaces are in high demand and priced at a premium, not only in metropolitan Melbourne, but across the Greater Melbourne region as well. For example, at the beginning of this year, a 507-hectare site just north of Beveridge was acquired within the Northern Freight Precinct for a major project with an estimated end value of $4.5 billion. Driven by logistics, freight corridors, e-commerce fulfilment, and transport links, industrial land remains one of Victoria’s strongest commercial sectors.
Additionally, strong transport links between regional Victoria and Melbourne are cutting commuting time to the city, while decentralised business models and job creation in regional towns are inspiring businesses to open satellite offices and secure the office and commercial space needed to support local employees.
Finally, retail strips and hospitality venues are keeping pace with population growth. Low residential vacancy rates in regional Victoria equate to a steady stream of consumers demanding goods and services.
All types of commercial growth are here to stay, not only here in Shepparton but across the Greater Melbourne region. And while Melbourne’s metropolitan residential property prices fell by 0.3 percent in April of this year, regional values remained steady, and commercial investors have noticed, following buyers out of the city and looking for the next opportunity in these more resilient areas.
Residential Market Growth’s Impact on the Commercial Market
Within a few short months, the market in Shepparton went from ‘finding its footing’ after a slowdown, to thriving by all definitions of the word. In November 2025, house prices steadied between $475,000 and $480,000, and properties sold in less than two months.
Units across the region also saw a significant boost in volume, surging higher than the Melbourne unit median in areas like the Goulburn and Murray Valley for the first time on record.. Rental yields above 5 percent also signify a shifting of the tides, with strong demand and limited supply across regional townships.
By March 2026, Greater Shepparton climbed to fourth among regional towns in Victoria for annual house price growth. This massive residential surge went hand in hand with commercial growth.
Market analysts have also recognised a cyclical relationship at play here: commercial amenity boosts residential desirability, and vice versa. Towns with more shops, services, job opportunities, and community meeting spots inspire people to take the leap and move to regional Victoria, adding fuel to both these ‘on fire’ markets.
What Does Regional Growth Mean for Property Owners?
When property values are high, it’s time to reevaluate commercial property insurance. A policy written before this unprecedented market growth is very likely undervaluing the asset. Alongside property values, rebuild and replacement costs have also been on the rise. These costs can climb quickly and outpace what most owners expect year to year.
Getting a professional valuation can help avoid situations where, if a property is insured for less than its full value, claims are reduced in proportion to the shortfall. With materials and labour becoming more expensive, being underinsured is an even more costly mistake. Commercial property owners should revisit older policies to ensure they have complete coverage before they need it.
Property damage coverage should reflect current rebuild costs and the building sum, and can include additional coverage for things like business interruptions, meaning expenses are covered in the event of forced closure, or any commercial motor vehicles that you use to operate your business.
Is Now the Right Time to Invest in Regional Commercial Property?
Commercial property values in regional towns like Shepparton have benefited massively from residential market growth. The two markets have moved in tandem, following state investments in infrastructure, strong transport links, job creation, and lifestyle preferences.
As regional Victoria becomes more of a real estate hotspot – particularly for industrial and warehouse spaces – property owners and investors can expect continued growth. But as values climb this quickly, underinsurance becomes a real risk. Commercial property insurance policies that haven’t been reviewed in the last year or so should be reevaluated against current valuations before renewal to ensure proper coverage.
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