Melbourne Fringe & Suburban Office Figures Q2 2024

Key Points:

• Leasing demand was negative across both Southbank and St Kilda Road over H1 2024 with both precincts recording 6-month absorption of -10,024sqm and -5,424sqm respectively.
• The office development pipeline remains empty for Southbank and St Kilda Road. Development activity in Melbourne’s City Fringe and Inner East remains modest, however is tapering off compared to levels experienced over 2020-2023.
• Vacancy for prime assets remains below secondary grade stock as of H1 2024 across both precincts. Total vacancy in St Kilda Road saw a mild decrease of -12bps over the last 6-months, attributed partly to negative net supply.
• Face rents across the fringe and suburban market saw mixed movements, with precincts experiencing stability or declines. Elevated incentives continue to put downward pressure on effective rents across most precincts.
• Investment activity in Melbourne’s Fringe and Metro markets remains subdued, with $104m in fringe and suburban assets transacting over H1 2024. Despite subdued volumes, yields continue to see expansion as pricing adjusts to meet investor buyer-vendor expectations.