Australia CBD Office Occupancy Brief

Despite challenging conditions brought on by COVID lockdowns and structural shifts in office usage patterns, recent data suggests that Australian CBD office markets are coming out of this downcycle in a much stronger position than general sentiment would suggest.

–         As of Q2 2023, 62% of Australian CBD office properties had occupancy rates of greater than 90%. These assets were well-occupied and in healthy leasing positions. An additional 15% of properties in these CBD markets had occupancy rates between 80% and 90%.

–         The strength of the market was even more evident when stratifying the occupancy baskets further. Over 52% of office properties in the study had occupancy rates above 95% as of Q2 2023.

–         The share of well-occupied CBD office properties was fairly consistent across each of the Australian capital cities at the time of the study. As of mid-year 2023, Canberra boasted the highest share of well-occupied office properties at 66%, followed by Sydney at 65%, Adelaide at 64%, Brisbane at 62%, Melbourne at 61%, and Perth at 54%.

The findings of this study suggest that the large majority of CBD office assets across Australia are in a fairly strong leasing position, and that elevated CBD vacancy rates are being driven by a relatively small number of assets. While elevated vacancy rates will remain a challenge over the near term, well situated and high quality office properties are still performing well at this time.