The July 2024 edition of the Office Market Report, which is released twice a year, showed overall office vacancy rate across Australia fell from 14.8 per cent to 14.6 per cent over the six months to July 2024. This figure is 4.2 percentage points above the historical average.
The report showed demand for office space was positive in both CBD and Non-CBD markets - the first time both demand markets were in positive territory since January 2023.
The report revealed while vacancy in CBDs stayed stable, marginally increasing from 13.5 to 13.6 per cent nationally, non-CBD areas saw a fall from 17.9 to 17.2 per cent.
Brisbane's vacancy decreased from 11.7 to 9.5 per cent, the first time its vacancy rate has been under 10 per cent since January 2013.
Sydney's CBD office vacancy rate fell from 12.2 to 11.6 per cent and Adelaide witnessed a drop from 19.3 to 17.5 per cent.
However, three CBD markers saw an increase in vacancy. Melbourne's vacancy rate rose from 16.6 to 18 per cent, Canberra's increased from 8.3 to 9.5 per cent, and Perth's lifted from 14.7 to 15.5 per cent, all largely driven by new supply of quality office space.
Property Council of Australia Chief Executive Mike Zorbas said the latest figures were encouraging.
"It is pleasing to see vacancy levels fall in half of Australia's CBDs," Mr Zorbas said. "There is room for very cautious optimism in parts of the office market.
"In our CBDs, office supply is continuing to be a driving force for vacancy levels as demand for office space has been positive.
"This demonstrates businesses still see a CBD location as the best place to do business.
"In the last three years, four of the six reporting periods have recorded positive demand for office spaces in our CBDs. In Adelaide and Brisbane, demand is currently 5.9 and 2.7 times their historical averages, respectively.
"We continue to see a preference for high quality office spaces, with Sydney and Adelaide being the only capitals to record higher prime vacancy than secondary vacancy.
"Some of the older, lower-grade office buildings that are in lower demand are now being withdrawn from the market to be repurposed through refurbishments or converted into residential spaces or hotels.
"Of note, Melbourne still faces stiff challenges. The Victorian Government simply has to get some of its workforce back a few days a week to support what must again be a thriving city," he said.
Sublease vacancy, a measure of businesses confidence reflected by businesses renting out parts of their office space, decreased in both the CBD and Non-CBD markets as Adelaide, Sydney and Melbourne all recorded sublease vacancy decreases.
Most of the nation's additional new supply planned to become available in the second half of 2024 will be in the Sydney market, with close to 300,000 sqm of office supply set to come online through to 2026, with 61.4 per cent of that supply already pre-committed (tenants already secured). Nearly 250,000 sqm is forecast to come online in Melbourne by 2026, with 20 per cent of that space already committed to by future tenants.
The supply of office spaces in our CBDs is projected to stay above the historical average until January 2026, while the supply in non-CBD markets will also remain near or above the historical average during the same period.
For the full details about the Office Market Report and July 2024 results, click here.
