National Australia Bank (NAB) said the fall showed conditions in the Australian commercial market were still weak, with retail and industrial markets particularly soft.

"Conditions are still by far the weakest for retail, with the index sinking to an all-time low of -45 points (from -36 points in the December quarter)," NAB said in a release.

"This sector is being hammered by on-going caution among households, poor retail business conditions and depressed confidence among retailers."

NAB said that the industrial property index dropped to minus 17 points in the March quarter, from minus 14 in the December quarter due to volatile economic conditions.

Office property and the central business district (CBD) hotel sector both performed well in the commercial property space, with indexes of 12 points and 57 points respectively.

NAB concludes that overall conditions in the commercial property market were expected to remain negative until the third quarter of 2012.