Melbourne CBD Office Figures Q1 2024

Key Points:

• Leasing demand in Melbourne’s CBD declined moderately, with total negative 6-month net absorption of -26,879sqm recorded. Negative net absorption was partially offset by strong positive demand for Premium grade office space (+12,304sqm).
• Supply in Melbourne’s CBD continues to show signs of normalisation amidst an elevated cost of debt and low pre-commitment levels. This could aid performance of existing assets.
• Melbourne CBD’s overall vacancy rate ended H2 2023 at 16.5%. This figure represented an increase of 155bps from H1 2023. Vacancy continues to bifurcate across precincts as tenant preference becomes more pronounced.
• Prime net face rents continue to remain sticky despite rising vacancy. Incentives in Q1 2024 saw the first sign of stability in recent years, resulting in positive effective rent growth.
• Melbourne CBD office sales remained subdued in Q1 2024, with $64m in CBD assets transacting. Yields expanded across Melbourne however at a decelerated pace in some precincts.