FINDING BALANCE: SUSTAINABLE GROWTH AND PROFITABILITY IN THE STRATA INDUSTRY

The 2026 Macquarie Business Banking strata benchmarking study is a portrait of an industry at a crossroads. While the sector has demonstrated consistent growth, an underlying challenge of shrinking profitability and escalating operational pressures is forcing a strategic rethink.

Further illustrated by historical data from Macquarie’s 20-year history of benchmarking the strata industry, the study shows a fundamental conflict between the pursuit of scale and the delivery of value. In a relationship-led industry, focusing on people – clients, staff, and owners - is paramount for sustainable success.

The great compression: growing revenues, falling profits

77% of respondents grew revenue in 2025, yet only 59% increased profits. This divergence highlights a stark long-term trend of persistent and structural pressure on performance. Median net profit margins have fallen 42% since 2005, and median EBITDA dropped from 33% in 2005, to 19% in 2025; a decrease of 9% since 2022.

Rising costs are the main cause of this squeeze. Salaries as a portion of revenue have climbed from 49% in 2022 to 52% in 2025, with businesses managing over 10,000 lots feeling this most acutely. This is compounded by increasing business complexity and a soft construction market, which intensifies competition for a finite number of lots. Without a compelling value proposition, this puts downward pressure on pricing.

Blueprint for outperformance

One in five businesses are observed as outperformers in the industry. Their success is not defined by size, but by discipline. These businesses achieved a healthier profit margin of 26% (versus 19% amongst industry peers) and grew lots under management by 12% (versus 5%). Their formula for outperformance includes a combination of robust productivity, strong performance measures, and winning with their staff and teams.

Three pillars of a sustainable future: people, process, platform

To navigate this challenging landscape, there is a need to return to the fundamentals, structured around three core pillars:

• People: In a relationship-driven industry, people matter. 24% of strata managers changed roles in 2025, incurring cost, but also putting client relationships at risk. Consequently, remuneration has increased, with average salaries for junior and senior strata managers jumping by 44% and 24% respectively since 2022. Retention strategies must go beyond salary to include managing burnout, fostering a positive culture, and providing support for dealing with challenging lot owner behaviour.

• Process: Discipline and rigour, through documented processes and clear operational mapping, will help combat inefficiency and risk. Clear processes are essential for ensuring contractual discipline and accurately charging for services.

• Platform: The emergence of artificial intelligence marks the next frontier. 80% of respondents already use AI in their businesses, primarily for communications and workflow management. Poised to reshape the role of the strata manager, AI may help automating administrative tasks, allowing focus on higher-value strategic and client-facing activities.

So, what lies ahead? Be part of the discussion.

The path to sustainable growth and profitability is not through aggressive expansion. Instead, a balanced and disciplined approach will allow businesses to build a resilient foundation amid growing complexity and competition.

The Macquarie Business Banking strata benchmarking report is now live, with discussions and forums commencing throughout the year. Get in touch with your Macquarie relationship manager to learn more about the results and be a part of the conversation.

www.macquarie.com.au/strata 

Disclaimer

This article has been prepared by Macquarie Business Banking, a division of Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 (‘Macquarie’) and is based on statistics and information sourced from the Macquarie Business Banking Strata Benchmarking Survey conducted by Fiftyfive5 in 2025 (‘the Survey’).

This information does not constitute advice. Before acting on this information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. You should obtain financial, legal and taxation advice before making any decision regarding this information.

This article is bought to you by SCA (WA) sponsor Macquarie Bank.