Melbourne CBD Office Figures Q2 2024

Key Points:

• Leasing demand in Melbourne’s CBD improved moderately, however net absorption remains negative, with 6-month net absorption of -15,435sqm recorded. Negative net absorption was partially offset by strong positive demand for Premium grade office space (+2,116sqm).
• Supply completions over Q2 2024 included Melbourne Quarter Tower (69,000sqm), a Docklands asset which achieved a c.40% pre-commitment rate prior to practical completion.
• Melbourne CBD’s overall vacancy rate ended H1 2024 at 18.0%. This figure represented an increase of 157bps from H2 2023. Vacancy continues to bifurcate across precincts as tenant preference becomes more pronounced.
• Prime net face rents continue to see growth across most precincts. Incentives in Q2 2024 continued to experience stability, resulting in positive prime effective rent growth this quarter.
• Melbourne CBD office sales remained subdued in Q2 2024, with $121m in CBD assets transacting. Yields expanded moderately across Melbourne due partly to recent deal evidence in the market.