The Australian commercial real estate market is quiet, but there are signs the next few months could see a flood of interest.

Commercial lender Think Tank has announced a "substantial increase" in its funding capacity following wholesale funding negotiations, and the company's executive director, Jonathan Streets, told Australian BrokerNews that he expects a quiet commercial property market to heat up in the months ahead.

"On the transactional side it's a little quiet in terms of people buying and selling commercial property. We believe this is causing pent-up demand that will release sometime late this year or early next year," Streets said.

Streets stated that along with softer demand from borrowers, many commercial lenders are also becoming more selective. He said this causes difficulties for borrowers who do have an appetite for commercial finance.

"Lenders are reasonably choosy about what they're willing to fund. I wouldn't say that credit is loosening up. People are still having to refinance loans from lenders that are no longer operating, such as Challenger. They're also having trouble getting a valuation to support the refinancing. The valuations are coming in low," he said.

In spite of a tighter commercial market, Streets expressed optimism that borrowers will still be drawn to commercial property. As residential property sees declining median values, he said the draw of positive yields in the commercial space should prove attractive to investors.

"Where the commercial property market sits at the moment, it's offering some quite compelling yields. You get 7.5 percent to 9 percent on commercial property as compared to 3 percent or so on residential where you're relying on capital growth," he commented.

For brokers wishing to explore commercial space, Streets said their current client portfolios could yield opportunities.

"When we look across our portfolio, practically all of our clients have one or more home loans. From a broker's perspective for their clients with home loans, there's a common need among SME clients for commercial finance," Streets said. "Brokers don't have to become commercial lending experts. They just need to know who to talk to."