The Property Council of Australia's bi-annual Office Market Report reveals significant trends across major markets. While the focus is usually on the major CBD markets across the east coast, some exciting trends have emerged in non-traditional markets this period.
Sydney CBD remains in the headlines after experiencing 46,234 sqm of take-up in the past six months, despite over 120,000 sqm of new stock entering the market. This led to vacancy rates increasing from 11.6 per cent to 12.8 per cent, suggesting weaker-than-expected return-to-office trends and growing occupier concerns about affordability. Brisbane CBD's previously improving vacancy trend has reversed, rising from 9.5 per cent in July 2024 to 10.2 per cent, with negative take-up over the last six months. Melbourne CBD continues to face challenges, maintaining its high 18 per cent vacancy rate despite some supply withdrawals.
Beyond these headline figures, several markets have shown notable strength relative to their size:
Coastal markets show enduring strength
The sustained performance of coastal markets continues to impress, driven by population shifts and expanding business presence. The Sunshine Coast maintains its position as one of Australia's tightest office markets, with vacancy dropping further from 5.0 per cent to 4.3 per cent and positive net absorption of 2,057 sqm over the last 12 months. Newcastle emerges as a standout performer in this group, recording strong take-up of 7,814 sqm while absorbing new supply of 3,894 sqm, driving vacancy down from 16.4 per cent to 14.9 per cent - its first reduction in six years. This robust performance during a period of supply additions particularly highlights Newcastle's growing market strength.
Adelaide and Perth lead CBD recovery
Adelaide stands out as the best-performing CBD market relative to its size, demonstrating remarkable absorption capacity. The market recorded 22,606 sqm of take-up in the past six months alone, contributing to an impressive annual absorption of 51,647 sqm. This strong demand, combined with modest supply additions of 6,659 sqm, has driven vacancy rates down from 17.5 per cent to 16.4 per cent. Perth's performance mirrors this positive trend, with substantial net absorption of 25,136 sqm against new supply of 21,288 sqm, reducing vacancy from 15.5 per cent to 15.1 per cent. These results showcase both markets' resilience and growing appeal to occupiers.
North Shore markets in transition
The North Shore office markets present an evolving story along Sydney's 'golden arc'. Macquarie Park continues to outperform with outstanding take-up results, while North Sydney, despite current elevated vacancies, shows promise for future performance. The recent Metro opening positions North Sydney particularly well for recovery, with its high-quality building stock likely to attract tenants seeking premium space at more affordable prices compared to Sydney CBD with enhanced connectivity. However, challenges persist in the Crows Nest/St Leonards precinct, creating a varied performance pattern along the North Shore corridor.
The latest Property Council results paint a nuanced picture of Australia's office markets, highlighting the emergence of new patterns in tenant preferences and market resilience. While traditional CBD markets face ongoing challenges with elevated vacancy rates and sluggish return-to-office trends, the strong performance of coastal markets and regional centres suggests a structural shift in occupier demands. The success of Adelaide and Perth CBDs, combined with early signs of revival in North Shore markets, indicates that secondary market locations with the right fundamentals and infrastructure improvements can outperform larger counterparts. As the office sector continues to evolve, these emerging trends may signal a longer-term recalibration of Australia's office market hierarchy, with opportunities increasingly dispersed beyond the traditional major CBD locations.
