Melbourne CBD Office Figures Q4 2023

February 1, 2024 7 Minute Read

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  • 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. Despite this, incentives saw large increases in Q4 2023, driving net effective rent declines in most precincts.
  • Melbourne CBD office sales remained subdued in Q4 2023, with $60m in CBD assets transacting. Yields expanded across all precincts despite limited deal evidence over 2023.