Roy Morgan research covering the year to June 2025 shows that 46 per cent of employed Australians, or more than 6.7 million people, work from home at least some of the time. By capital city, 55 per cent of Sydney's office workforce and 52 per cent of Melbourne's work from home at least part of the week. Brisbane and Perth sit considerably lower, at 43 per cent and 40 per cent respectively. It is in those figures that the divergence in office market performance begins as it directly feeds into ongoing demand for business accommodation.
Melbourne CBD carries the most difficult outlook of any major market. Vacancy sits at 19 per cent, over one million square metres of available space, and while annual absorption of 29,475 sqm is a positive result in isolation, at that pace the overhang would take many years to clear without significant stock withdrawal. New supply of 100,618 sqm entered the market in just the past six months, adding further pressure to a market that has consistently recorded an elevated CBD work from home rate. The formalisation of two days from home as a legal entitlement can only add further weight to that challenge, with recovery remaining a long horizon for most landlords.
Sydney's trajectory is more encouraging. Vacancy at 13.8 per cent is considerably lower, and annual net absorption of 21,657 sqm was recorded despite 84,553 sqm of new supply entering the market over the same period. That supply has masked genuine strengthening in demand, with occupiers gravitating toward premium stock and the economics of new development becoming increasingly prohibitive. The conditions for gradual vacancy compression are building, even if progress remains measured.
Brisbane and Perth present the clearest evidence of what lower work from home penetration delivers for office fundamentals. Brisbane CBD vacancy stands at 11.8 per cent, with annual absorption of 37,480 sqm, the strongest result among the major CBDs. Perth CBD recorded 6,429 sqm of annual absorption, bringing vacancy to 16.9 per cent, with improving business activity tied to resources and defence spending providing additional support. Both markets benefit from a workforce spending more days at the desk, and neither is likely to see Victoria's approach replicated in the near term.
Adelaide tells a layered story. With a work from home rate of just 45 per cent, demand conditions should be favourable, and annual absorption of 33,023 sqm is impressive. Yet vacancy at 15.5 per cent reflects the structural reality that Adelaide's economy does not generate the volume of office demand needed to absorb past supply additions quickly.
Melbourne's suburban office markets compound the city's challenges further. St Kilda Road vacancy has reached 31.6 per cent with negative annual absorption of 48,711 sqm, while smaller, Southbank carries vacancy of 15 per cent with negative absorption over the past year. Both markets sit in the shadow of a CBD that is itself struggling to absorb demand, leaving little room for suburban recovery in the near term. Legislating remote work as an entitlement risks entrenching the very behaviours that have driven Melbourne's office markets to where they are today. With suburban vacancy already at crisis levels and CBD stock proving slow to absorb, anything that further normalises days away from the office will only extend the recovery timeline for a market that can ill afford it.
