Melbourne CBD Office Occupancy – Q1 2026 Update

Melbourne CBD office occupancy hit a post-pandemic high in Q1 2026, exceeding 65% for the first time since 2020, despite the conflict in the middle-east and announced WFH legislation threatening the outlook. Our view on the latest data suggests these factors are having minimal impact on average occupancy rates today, with potential upside to peak occupancy (and absorption) expected over the coming months. 

Please see below for some key findings:

• Over the last four years, March has underperformed February with respect to average occupancy. We attribute this to seasonal factors, and not from the recent rise in fuel prices.
• Our analysis of occupancy by week over the month of March reveals that whilst there was a material decline in occupancy during the 2nd week of the Iran conflict, this was likely due to it coinciding with Melbourne’s labour day long weekend, with occupancy steadily rising from this point onwards.
• The Victorian WFH legislation is set to take effect from the 1st of September 2026. Melbourne has already been averaging a 3-day in office work week for the last several months, and as such we see little downside to average occupancy.
• Instead, we believe peak occupancy can see a material increase once this legislation is introduced, particularly if WFH days become more concentrated and if employers use the legislation to take a more aggressive stance to office attendance for those who rarely come into the office.
• In turn, an increase in peak occupancy could lead to positive tailwinds to office net absorption over the medium term, as businesses adjust their footprint in response to a structural change in attendance patterns.