Melbourne Fringe & Suburban Office Figures Q4

Key points:

• Leasing demand was mixed over H2 2024 with Southbank & St Kilda Road recording 6-month absorption of +636sqm and -6,702sqm 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, with c.25,000sqm of completions anticipated in 2025 & 2026. More than 60% of future metro supply consists of projects in the development application phase, awaiting construction. 
• Vacancy for prime assets remains below secondary grade stock as of H2 2024 across both precincts. Total vacancy in Southbank saw a moderate decrease of -102bps over the last 6-months, attributed partly to negative net supply.  
• Face rents across the fringe and suburban market saw limited movement in Q4 2024, with most precincts experiencing stability. Incentive movement mostly stabilised over the quarter, partly attributed to limited deal evidence.
• Investment activity in Melbourne’s Fringe and Metro markets saw a moderate uptick in H2 2024, however total volumes remained subdued compared to historical levels. Yields continue to see expansion as pricing adjusts to meet buyer-vendor expectations.