Australian CBD office occupancy proves to be strong

Australian CBD office markets are coming out of the post-pandemic downcycle stronger than first thought.

CBRE’s latest Australia CBD Office Occupancy Brief highlights that most CBD offices are in a strong leasing position with elevated CBD vacancy rates being driven by a small number of assets.

As of Q2 2023, 62% of Australian CBD office properties had occupancy rates of greater than 90%, while 15% of properties in these CBD markets had occupancy rates between 80% and 90%. 

CBRE’s research shows the share of well-occupied office properties being consistent across each of the Australian cities, with Canberra having the highest occupancy at 66% followed by Sydney at 65%, Adelaide at 64%, Brisbane at 62%, Melbourne at 61% and Perth at 54%. 

CBRE Research Manager Thomas Biglands predicts that while overall vacancy rates may increase marginally over the near term, well-situated and high-quality office properties will maintain elevated occupancy rates over this time.

“We forecast that the CBD vacancy rate will peak at 13.5% in 2024 due to the final recovery in return-to-work rates in the larger markets and the elevated levels of new supply expected to be delivered over the next year. Following this peak, we expect that vacancy rates will recover gradually as construction slows and leasing demand accelerates.” 

Mark Curtain, CBRE Senior Managing Director, Advisory & Transaction Services, commented, “The lockdown period forced occupiers to rethink their office requirements and necessitated a shift towards hybrid working models, a move which led to a period of slower leasing activity and rising vacancy rates.

“Despite these shifts, office market conditions in Australia are reversing course and showing real signs of improvement. We are coming out of this period in a much stronger position than general sentiment would suggest.”