Melbourne office occupancy rate second lowest in country
Melbourne’s office vacancy rates are the second worst in the country, with trends picked up in Covid still shaping the CBD.
Victoria
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Melbourne’s CBD has the second-worst vacancy rate in the country behind only Adelaide.
The Property Council’s 2024 Office Market Report showed Melbourne’s overall office vacancy rate increased to 16.4 per cent, up from 14.9 per cent in July 2023.
Only Adelaide was worse, with a vacancy rate of 19.3 per cent in January.
Property Council Victorian executive director Cath Evans said the data showed office trends that emerged in the wake of Covid continue to shape the CBD market.
“Our data shows again that modern, premium office space is still in significant demand in the world of hybrid working patterns,” she said.
“Offices designed for collaboration that meet sustainability and technology expectations and are situated in vibrant locations are positioned for low vacancy and high occupancy.
“At the same time, vacancy continues to increase in lower grade office accommodation.”
Part of the increase in vacancy rate was from extra premium office supply coming on to the market, with another 16,000 square metres of floor space set to be added over the next two years – the most of any city in Australia.
The office vacancy rate for premium grade offices in Melbourne declined to 11.2 per cent in January, while vacancy rates went up in every other category.
B-grade offices were the most likely to be vacant, with 22.3 per cent sitting empty in January, compared with 20.4 per cent in July last year.
Ms Evans said new uses needed to be found for lower grade office stock so they don’t sit empty.
“The continued shift in the market reinforces the need to support innovative planning and
building solutions which bring new life to existing older buildings, including refurbishment
and conversion projects,” she said.
“Melbourne’s CBD, and the state’s economy, will continue to benefit from a strong, robust and resilient commercial office market.”
The new data comes as City of Melbourne Councillor Roshena Campbell is leading a push to get more office workers back to their desks in the CBD – particularly public servants.
Melbourne’s office occupancy rates have regularly lagged comparable cities in Sydney and Brisbane since the pandemic as local city workers have relished a more flexible approach to the workplace.
Sydney’s CBD had an office vacancy rate of 12.2 per cent in January, while Brisbane had 11.7 per cent for the same period.
Hobart was the best performing market with just a 2.8 per cent vacancy rate, followed by Canberra at 8.3 per cent.
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