Melbourne Fringe & Suburban Office Q4 2025

Key Points:

• Leasing demand was mixed over H2 2025 with Southbank & St Kilda Road recording 6-month absorption of +7,664sqm and -30,398sqm respectively.
• The office development pipeline remains empty for Southbank and St Kilda Road. We currently forecast elevated withdrawals across St Kilda Road over the short term. Majority of suburban supply remains in a DA Approved status with project delays likely.
• Vacancy declined by 173bps in Southbank, dropping to 14.96%. St Kilda Road vacancy rose by 246bps to 31.60%. Prime vacancy outperformed across Southbank and underperformed within St Kilda Road as mixed signals persist across both precincts.
• Face rents across the metro market normalised in Q4 2025, with no growth observed across majority of precincts. Incentives also held flat across most precincts, with year-on-year incentive compression remaining elevated across select parts of the market. 
• Investment activity in Melbourne’s Fringe and Metro markets experienced a surge in activity over Q4 2025 with just over $333m in fringe and suburban assets transacting. Yields have held stable for the third consecutive quarter across all precincts except for St Kilda Road, with expectations that Melbourne’s metro office market has reached peak pricing.