Commercial mortgages: Unlocking new growth in a shifting market
While the commercial property market remains highly segmented, commercial mortgages continue to present an opportunity for brokers.
One reason is the increasing importance of advisers who can find solutions for complex scenarios, according to Joel Harrison, head of partnerships and distribution at specialist lender Thinktank.
“As funding options expand beyond the traditional banks into non-bank, private and more structured solutions, borrowers are increasingly relying on brokers to help navigate both choice and complexity,” he says.
Harrison says demand in the segment has been consistently expanding across commercial property, commercial SMSF, and private lending, particularly from self-employed borrowers, SMEs, and those operating through trust and company structures.
“That demand appears to be driven by a combination of factors, including a more selective bank appetite in certain areas, increasing borrower sophistication around structuring and asset ownership, and a growing need for lenders who can take a more practical, contextual view of a borrower’s overall position,” he adds.
“More broadly, borrowers are placing greater value on credit solutions that complement how they actually operate, invest and build wealth.”
Brokers’ perspective
So, what are brokers seeing at the coalface?
Jarrod Hodges, director of finance and lending at Bentleys Victoria, says he has seen strong demand for commercial warehouses, with business owners increasingly shifting from leasing premises to purchasing the freehold they operate from.
“These properties are being purchased in various structures, including special purpose vehicles and SMSFs,” he adds.
Hardik Shah, finance strategist at Loan Gallery Finance, has seen a similar trend.
“I’ve been seeing a lot of industrial warehouses, whether it’s buying and renting them out or buying and using them as an owner- occupier. Even construction people want to develop such properties. Compared to residential, commercial can be faster to build,” he says.
“The retail space is struggling a bit. But if you have your own business, then even retail can be good enough for someone who’s self-employed, as opposed to renting.”
Location remains key, according to Shah.
“Sydney west and those areas have still got very strong demand,” he adds.
“Overall, Victoria hasn’t performed that well over the last two years, whether it’s commercial or residential, compared to the Queensland and the Sydney market. It has become a bit tighter in the retail space as well, because a lot of vacancy rates are high in certain retail areas.”
The right structure
One area where commercial mortgages can be more complex than a standard residential loan is in how the deal is structured.
Thinktank’s Harrison says this often determines how efficiently a transaction progresses and whether potential issues are avoided later in the process.
“Experienced brokers understand where a deal belongs, which lender, which structure and which approach will best align with the borrower’s objectives,” he says.
“That may involve trusts, company borrowers, guarantor arrangements or SMSF structures, depending on the scenario.
“A well-structured solution is not just about achieving approval, but ensuring the facility aligns with the borrower’s broader commercial intent. When that alignment is right, the process tends to be more efficient and the outcome more sustainable.”
For Hodges, taking a holistic view of a commercial deal is essential.
“It is important to articulate and highlight to the lender all the revenue streams generated by the business and any relevant add-backs or one-off items that may have impacted the historic trading performance,” he says.
“A clear, concise transaction summary outlining risk mitigants is generally well received by the credit analyst assessing the transaction.”
Harrison also notes that while rate remains important, it is rarely the sole consideration.
“Borrowers are typically looking for clarity, confidence and a solution that is aligned to their specific circumstances,” he adds.
“Commercial transactions tend to be more nuanced and time-sensitive, often involving more complex structures. In that environment, transparency, clear communication and confidence in execution become critical.
“Borrowers want to understand not just what is possible, but what is likely to be delivered.”
Time to diversify
Mortgage and Finance Association of Australia (MFAA) figures show mortgage brokers now account for a record 77 per cent of new residential lending, underscoring the channel’s continued dominance in the home loan market.
By contrast, commercial lending remains far less saturated, with industry reports suggesting around 13 per cent of residential brokers are also active in the space.
For Shah, these conditions present an opportunity for brokers to broaden their offering.
“Look, it’s such a big market, and it is less competitive than residential,” he says.
“So, asking the right questions, putting that thought in the client’s mind, doing that needs analysis with the client, is a great way to see if there is any commercial opportunity.”
Thinktank’s Harrison also says diversification can be valuable in the right circumstances.
“Brokers who continue to build capability across different lending types will be better placed to support more complex and evolving client needs over time,” he says.
So, what should brokers who want to make their mark in commercial mortgages be doing?
Hodges emphasises the importance of a commercial mindset.
“Be solutions-focused, rather than solely interest-rate-focused,” he says.
“In many instances, structuring aspects such as loan terms, covenants and leverage are more important factors to business owners than solely interest rate.”
Meanwhile, Shah encourages brokers to be awake to opportunities in their network.
“In the commercial space, because there are not many brokers, referral partners come looking after you if you’re good at what you do,” he says.
Commercial outlook
Looking forward, Thinktank’s Harrison says that as the market continues to evolve, the importance of well-structured, flexible credit solutions is only likely to keep increasing.
“Brokers who broaden their capability across commercial, SMSF and private lending will be better positioned to support more sophisticated borrowers and build longer-term relationships,” he says.
“Equally, having the right support behind them remains important. Education is woven into our business model – from practical case-based training to hands-on scenario support. We encourage brokers to engage early with our relationship managers.”
Harrison also reiterates the importance of lenders working closely with the third-party channel to achieve the best possible outcomes for borrowers.
“Broker feedback has played a central role in how Thinktank’s offering has evolved over time. That includes product settings, documentation pathways and assessment processes, as well as the practical tools brokers use day to day,” he says.
“This has led to expansion across commercial and SMSF loan sizes, refinements to private lending structures and ongoing improvements to documentation and credit workflows. A consistent focus has been on improving clarity and efficiency while maintaining a disciplined approach to credit.
“Brokers continue to place value on speed, certainty and accessibility, and those areas remain a priority as the offering continues to evolve.”
