Melbourne Fringe and Suburban Office Figures Q1 2026

Key Points:

• Leasing demand was mixed over H2 2025 with Southbank & St Kilda Road recording 6-month absorption of + 7,185sqm and -30,398sqm respectively.
• The office development pipeline remains empty for Southbank and St Kilda Road. Across metro precincts, we expect rising energy prices will flow on to raw material costs and by extension, office economic rents. We expect very few major completions in 2028.
• CBRE Research metro vacancy recorded mixed movement over the last 12-months. Our view is that vacancy across the metro is recalibrating in response to the recent levy changes and current supply outlook.
• Face rents across the metro market continued to normalise in Q1 2026, with modest growth observed across the majority of precincts. Incentives faced renewed upward pressure this quarter, as global uncertainty increases pressure to secure tenants.
• Investment activity in Melbourne’s Fringe and suburban precincts experienced another strong quarter over Q1 2026 with just over $434m in fringe and suburban assets transacting. Yields have held stable for the fourth consecutive quarter across all precincts except for St Kilda Road. We expect yields to increase over 2026 in response to recent interest rate increases