Press Release
CBRE commentary: Property Council of Australia office vacancy statistics August 2026
Australia
August 5, 2026
Media Contact
Kathryn House
Communications Director
To accompany the release of the latest Property Council of Australia Office Market Report, CBRE's Office Leasing experts share their insights into the key trends emerging in Australia's major office markets.
National Overview
Tom Broderick, CBRE Head of Office & Capital Markets Research, Australia
“The Australian office leasing market has surprised us on the upside in early 2026, against a backdrop of global volatility. Enquiry volumes across Australia were up 19% in H1 2026, compared to the same period, indicating that occupiers are prepared to make long-term leasing decisions.”
“While national CBD vacancy was relatively stable in H1, we expect it to tighten over the next few years given that supply will be significantly below long-term averages.”
“While national CBD vacancy was relatively stable in H1, we expect it to tighten over the next few years given that supply will be significantly below long-term averages.”
Tim Courtnall, CBRE Head of Investor Leasing, Pacific
“We observed similar trends from Q1 into Q2, with solid transaction volumes in the 1,000sqm to 3,000sqm size range nationally. However, decision making remains slow and onerous, especially with any organisations that are headquartered overseas. Occupiers want to move, but how much sway do local management teams have, and can they convince their global peers?”
“SMEs continue to find it difficult to commit to new long-term leasing solutions given the current conundrum with talent demands for flexibility and rising operational costs.”
“The tech sector is starting to bubble again with some positive growth stories across the country. Mergers and acquisitions are back and free flowing capital from investment banks and private equity firms is driving some positive news flow, which always services our markets well from an office point of view.”
“Our view for H2 is that markets will be much the same, with ongoing volatility, and whilst it’s a slow turnaround, we are heading in the right direction.
“Incentives remain stubborn at current levels and rents are being pushed in nearly all markets, however owners are getting confident to start reducing renewal incentives.”
“Adelaide, Perth and Brisbane look to be turning the corner quickest in terms of demand, however we are approaching H2 cautiously.
“SMEs continue to find it difficult to commit to new long-term leasing solutions given the current conundrum with talent demands for flexibility and rising operational costs.”
“The tech sector is starting to bubble again with some positive growth stories across the country. Mergers and acquisitions are back and free flowing capital from investment banks and private equity firms is driving some positive news flow, which always services our markets well from an office point of view.”
“Our view for H2 is that markets will be much the same, with ongoing volatility, and whilst it’s a slow turnaround, we are heading in the right direction.
“Incentives remain stubborn at current levels and rents are being pushed in nearly all markets, however owners are getting confident to start reducing renewal incentives.”
“Adelaide, Perth and Brisbane look to be turning the corner quickest in terms of demand, however we are approaching H2 cautiously.
City by City Agent Commentary
Sydney CBD
Chris Hanley, Senior Director, Office Leasing
(see North Sydney and Western Sydney commentary further below)
What will be the biggest challenge for your market this year?
“The cost of delivering fitted space. Tenants have made their preference clear. 68% of our 1,000sqm+ deals in H1 went to fitted space, and 94% of sub-1,000sqm briefs are asking for it. That isn't going to change. The difficulty is what it costs to provide. New speculative suites are running at an average of $1,800/sqm to build against average market net rents of circa $1,430/sqm, this is soaking up a huge proportion of the available incentive on a five-year deal. CBRE Research has fitout costs rising a further 18% through to the end of 2027. That means landlords need to spend more to compete at exactly the point effective rents are already moving. Western Corridor is up 16.7%, Midtown 13.2% and the Core 10.3% year on year. Speculative fitout accounts for only 11.8% of Core availability but 15% of transactions, so we are not delivering enough of the product that is actually leasing. There is also a drag on decision making. Business confidence is near an all-time low, the cash rate is at 4.35%, and the Budget changes to discretionary trusts and CGT have given private occupiers more to work through. Lead times on 1,000sqm+ requirements have moved from 12 months in 2024 to more than 15 months today. Demand is not the issue. Making the numbers work is.”
What is the main thing you are telling clients about the market this year?
“It depends which side of the table they are on. For occupiers, the message is to start earlier than you think you need to. New supply is looking extremely light between 2028 and 2031 and withdrawals are back. There are 76 active 1,000sqm+ requirements still to transact against a long-term average of 70, and every precinct has recorded effective rent growth. 36% of 1,000sqm+ deals were never briefed to market, so occupiers who come late are not seeing the best options. For landlords, presentation is now what wins deals. Prime assets recorded 91,000sqm of net absorption in 2025 while secondary shed 69,000sqm, and Prime itself has split again. High-rise Core is achieving circa $2,300/sqm against circa $1,150/sqm for low-rise A grade in the same precinct. Despite recent strong effective rent growth, the Western Corridor is looking like exceptional value, which is why that precinct has taken 40% of 1,000sqm+ deals for two consecutive quarters. Low-rise space competes on presentation and a fitted product, or it does not compete. The other point worth making is that the anticipated AI-driven sublease wave has not materialised. Sublease vacancy is 59,039sqm, up only 2.9% year on year and still well below the 10-year average of circa 70,000sqm. Across the board more tenants are growing than shrinking.”
What will be the biggest challenge for your market this year?
“The cost of delivering fitted space. Tenants have made their preference clear. 68% of our 1,000sqm+ deals in H1 went to fitted space, and 94% of sub-1,000sqm briefs are asking for it. That isn't going to change. The difficulty is what it costs to provide. New speculative suites are running at an average of $1,800/sqm to build against average market net rents of circa $1,430/sqm, this is soaking up a huge proportion of the available incentive on a five-year deal. CBRE Research has fitout costs rising a further 18% through to the end of 2027. That means landlords need to spend more to compete at exactly the point effective rents are already moving. Western Corridor is up 16.7%, Midtown 13.2% and the Core 10.3% year on year. Speculative fitout accounts for only 11.8% of Core availability but 15% of transactions, so we are not delivering enough of the product that is actually leasing. There is also a drag on decision making. Business confidence is near an all-time low, the cash rate is at 4.35%, and the Budget changes to discretionary trusts and CGT have given private occupiers more to work through. Lead times on 1,000sqm+ requirements have moved from 12 months in 2024 to more than 15 months today. Demand is not the issue. Making the numbers work is.”
What is the main thing you are telling clients about the market this year?
“It depends which side of the table they are on. For occupiers, the message is to start earlier than you think you need to. New supply is looking extremely light between 2028 and 2031 and withdrawals are back. There are 76 active 1,000sqm+ requirements still to transact against a long-term average of 70, and every precinct has recorded effective rent growth. 36% of 1,000sqm+ deals were never briefed to market, so occupiers who come late are not seeing the best options. For landlords, presentation is now what wins deals. Prime assets recorded 91,000sqm of net absorption in 2025 while secondary shed 69,000sqm, and Prime itself has split again. High-rise Core is achieving circa $2,300/sqm against circa $1,150/sqm for low-rise A grade in the same precinct. Despite recent strong effective rent growth, the Western Corridor is looking like exceptional value, which is why that precinct has taken 40% of 1,000sqm+ deals for two consecutive quarters. Low-rise space competes on presentation and a fitted product, or it does not compete. The other point worth making is that the anticipated AI-driven sublease wave has not materialised. Sublease vacancy is 59,039sqm, up only 2.9% year on year and still well below the 10-year average of circa 70,000sqm. Across the board more tenants are growing than shrinking.”
Melbourne
Ashley Buller, Joint Head of Office Leasing, Victoria
What will be the biggest challenge for your market this year?
“The Victorian Government's confirmed reduction of circa 25,000–30,000 sqm of office space this year, with the prospect of further space being handed back, looks like a headwind. However, we argue it's actually a fantastic opportunity. This is a story that will be further nuanced by November's state election. If we see no change in government, we will likely see further space handed back. However, if there's a change of government, occupancy strategies could shift again, potentially in a way that encourages more public servants back into the office. Either outcome reshapes vacancy, but neither is a one-way negative.
What both scenarios have in common is that they will likely release further genuinely good-quality stock back into the market. That's a real opportunity for tenants chasing better space, and for landlords with the appetite to reposition. Yes, vacancy will increase in the short term. But repositioning well-located buildings/spaces previously occupied by government will result in stronger rental profiles, which longer term will be a benefit to Victorian CBD owners.
What is the main thing you are telling clients about the market this year?
There are two interesting things to watch in H2 this year. On the ownership side, we're tracking five buildings above 20,000 sqm currently on the market for sale, plus one eastern core development opportunity, a genuine flight of quality stock being tested at once. Depending on what transacts, this could bring new capital into Melbourne or give existing landlords the chance to scale up their Victorian portfolios.
On the occupier side, demand is just as deep: nine tenants are currently in the market with requirements above 8,000 sqm, and a further 43 tenants above 1,000 sqm have yet to commit to a decision. There's a genuine weight of requirements still to be satisfied, and owners with the right product are well placed to capture it. Leasing activity has already been strong in the first half, with several large deals ranging from 7,500 sqm to close to 20,000 sqm completed, and we expect that momentum to build rather than fade through the second half of the year.
“The Victorian Government's confirmed reduction of circa 25,000–30,000 sqm of office space this year, with the prospect of further space being handed back, looks like a headwind. However, we argue it's actually a fantastic opportunity. This is a story that will be further nuanced by November's state election. If we see no change in government, we will likely see further space handed back. However, if there's a change of government, occupancy strategies could shift again, potentially in a way that encourages more public servants back into the office. Either outcome reshapes vacancy, but neither is a one-way negative.
What both scenarios have in common is that they will likely release further genuinely good-quality stock back into the market. That's a real opportunity for tenants chasing better space, and for landlords with the appetite to reposition. Yes, vacancy will increase in the short term. But repositioning well-located buildings/spaces previously occupied by government will result in stronger rental profiles, which longer term will be a benefit to Victorian CBD owners.
What is the main thing you are telling clients about the market this year?
There are two interesting things to watch in H2 this year. On the ownership side, we're tracking five buildings above 20,000 sqm currently on the market for sale, plus one eastern core development opportunity, a genuine flight of quality stock being tested at once. Depending on what transacts, this could bring new capital into Melbourne or give existing landlords the chance to scale up their Victorian portfolios.
On the occupier side, demand is just as deep: nine tenants are currently in the market with requirements above 8,000 sqm, and a further 43 tenants above 1,000 sqm have yet to commit to a decision. There's a genuine weight of requirements still to be satisfied, and owners with the right product are well placed to capture it. Leasing activity has already been strong in the first half, with several large deals ranging from 7,500 sqm to close to 20,000 sqm completed, and we expect that momentum to build rather than fade through the second half of the year.
Brisbane
Campbell Tait, Senior Director, Office Leasing
What will be the biggest challenge for your market this year?
“The market continues to tighten, highlighted by the most recent PCA data release. The next five years will be the lowest supplied period for Brisbane since the early 1990’s, which is reducing tenants’ options when they come to market. The tightening market combined with high economic rents for new development continues to drive face rents for existing buildings higher.”
What is the main thing you are telling clients about the market this year?
“While enquiry has been improved so far this year, occupier decision making remains slow. This has meant that deal volumes remain relatively subdued so far. However, a similar trend occurred last year with a flurry of leasing transactions occurring in Q4. We’d expect the same to happen by the end of this year.”
“The market continues to tighten, highlighted by the most recent PCA data release. The next five years will be the lowest supplied period for Brisbane since the early 1990’s, which is reducing tenants’ options when they come to market. The tightening market combined with high economic rents for new development continues to drive face rents for existing buildings higher.”
What is the main thing you are telling clients about the market this year?
“While enquiry has been improved so far this year, occupier decision making remains slow. This has meant that deal volumes remain relatively subdued so far. However, a similar trend occurred last year with a flurry of leasing transactions occurring in Q4. We’d expect the same to happen by the end of this year.”
Gold Coast
Tania Moore, Senior Director, Office Leasing
What will be the biggest challenge for your market this year?
“The Gold Coast office market has now recorded its fifth consecutive year with vacancy below 8%, creating a significant supply constraint and limiting tenant mobility. This is particularly evident in the A-grade market, where less than 3,000 square metres of available space remains. While a proportion of vacancy exists within lower-grade assets, much of this stock is concentrated in C and D-grade buildings that are likely future redevelopment sites. At the same time, incentive levels remain below 20%, making it increasingly challenging for tenants to secure fit-out contributions that cover a significant portion of those costs which is reducing the appeal of unfitted space.”
What is the main thing you are telling clients about the market this year?
“We expect current market conditions to persist across all asset classes, with no significant new office supply anticipated until 2028. Demand remains resilient; however, lease renewals continue to dominate transaction activity as limited alternative accommodation options make relocation costs difficult to justify. In the absence of new supply, occupiers are increasingly focused on securing existing quality space early and planning well ahead of lease expiry to maintain flexibility in their property decisions.”
“The Gold Coast office market has now recorded its fifth consecutive year with vacancy below 8%, creating a significant supply constraint and limiting tenant mobility. This is particularly evident in the A-grade market, where less than 3,000 square metres of available space remains. While a proportion of vacancy exists within lower-grade assets, much of this stock is concentrated in C and D-grade buildings that are likely future redevelopment sites. At the same time, incentive levels remain below 20%, making it increasingly challenging for tenants to secure fit-out contributions that cover a significant portion of those costs which is reducing the appeal of unfitted space.”
What is the main thing you are telling clients about the market this year?
“We expect current market conditions to persist across all asset classes, with no significant new office supply anticipated until 2028. Demand remains resilient; however, lease renewals continue to dominate transaction activity as limited alternative accommodation options make relocation costs difficult to justify. In the absence of new supply, occupiers are increasingly focused on securing existing quality space early and planning well ahead of lease expiry to maintain flexibility in their property decisions.”
Adelaide
Andrew Bahr, National Director, Office Leasing
What will be the biggest challenge for your market this year?
“Protracted decision-making by occupiers, driven by ongoing global uncertainty, is increasingly impacting transaction timelines and has the potential to place deals at risk. The time required to finalise transactions is certainly not decreasing, and when coupled with a continued escalation in fit-out costs and incentives that are likely to begin contracting, relocating tenants may become increasingly challenging. At the same time, declining levels of prime-grade vacancy are limiting quality options for occupiers. This environment is likely to encourage a greater proportion of tenants to renew existing leases rather than relocate, which could create additional challenges for owners carrying direct vacancy and seeking to lease available space.”
What is the main thing you are telling clients about the market this year?
“Demand in Adelaide remains strong, with enquiry levels at record highs, up 40% in Q2 2026 compared to Q2 2025. Occupier demand continues to be driven by businesses seeking to upgrade their workplace, enhance office culture, and provide better building amenity to support attendance and productivity.
Owners who have already invested in upgrading their assets are likely to continue capturing most of the new leasing activity. As occupiers become more discerning, the gap between modernised and non-modernised buildings is widening. For owners yet to reposition their assets, we strongly recommend taking a proactive approach to meet market expectations and remain competitive.”
“Protracted decision-making by occupiers, driven by ongoing global uncertainty, is increasingly impacting transaction timelines and has the potential to place deals at risk. The time required to finalise transactions is certainly not decreasing, and when coupled with a continued escalation in fit-out costs and incentives that are likely to begin contracting, relocating tenants may become increasingly challenging. At the same time, declining levels of prime-grade vacancy are limiting quality options for occupiers. This environment is likely to encourage a greater proportion of tenants to renew existing leases rather than relocate, which could create additional challenges for owners carrying direct vacancy and seeking to lease available space.”
What is the main thing you are telling clients about the market this year?
“Demand in Adelaide remains strong, with enquiry levels at record highs, up 40% in Q2 2026 compared to Q2 2025. Occupier demand continues to be driven by businesses seeking to upgrade their workplace, enhance office culture, and provide better building amenity to support attendance and productivity.
Owners who have already invested in upgrading their assets are likely to continue capturing most of the new leasing activity. As occupiers become more discerning, the gap between modernised and non-modernised buildings is widening. For owners yet to reposition their assets, we strongly recommend taking a proactive approach to meet market expectations and remain competitive.”
Perth
James Phelan, Senior Director, Office Leasing
What will be the biggest challenge for your market this year?
“Elevated construction and fitout costs remain the market's most significant day-to-day challenge. While tenant demand remains very strong, many tenants continue to take a cautious approach to leasing decisions and capital expenditure. The cost of delivering new fitouts has materially impacted leasing activity, with only 22% of new transactions involving tenants constructing a new fitout. At the same time, high spec fitout delivery costs have reduced landlords' appetite to bring fitted space to market, limiting overall supply. As a result, demand has become increasingly concentrated on existing and speculative tenancies, which accounted for 78% of all transactions. These spaces provide tenants with a more cost-effective and time efficient solution, requiring only minor modifications before occupation and reinforcing the strong preference for fitted space across the Perth CBD market.”
What is the main thing you are telling clients about the market this year?
“We are advising clients that the Perth CBD office market is undergoing a structural shift from a tenant to a landlord favourable market for the first time since 2012. Limited future supply, building withdrawals and strong tenant demand, including numerous large tenants relocating from suburban markets, are expected to drive a step change in rental growth from 2027 onwards. Premium, A+ and A Grade assets are likely to benefit the most, particularly those offering fitted accommodation, strong amenity and quality river views. Tenants are increasingly recognising these dynamics and moving earlier to secure space, reflected by CBRE recording 25 Heads of Agreement over 500sqm in Q2 2026, the highest quarterly volume since tracking commenced in 2018.”
“Elevated construction and fitout costs remain the market's most significant day-to-day challenge. While tenant demand remains very strong, many tenants continue to take a cautious approach to leasing decisions and capital expenditure. The cost of delivering new fitouts has materially impacted leasing activity, with only 22% of new transactions involving tenants constructing a new fitout. At the same time, high spec fitout delivery costs have reduced landlords' appetite to bring fitted space to market, limiting overall supply. As a result, demand has become increasingly concentrated on existing and speculative tenancies, which accounted for 78% of all transactions. These spaces provide tenants with a more cost-effective and time efficient solution, requiring only minor modifications before occupation and reinforcing the strong preference for fitted space across the Perth CBD market.”
What is the main thing you are telling clients about the market this year?
“We are advising clients that the Perth CBD office market is undergoing a structural shift from a tenant to a landlord favourable market for the first time since 2012. Limited future supply, building withdrawals and strong tenant demand, including numerous large tenants relocating from suburban markets, are expected to drive a step change in rental growth from 2027 onwards. Premium, A+ and A Grade assets are likely to benefit the most, particularly those offering fitted accommodation, strong amenity and quality river views. Tenants are increasingly recognising these dynamics and moving earlier to secure space, reflected by CBRE recording 25 Heads of Agreement over 500sqm in Q2 2026, the highest quarterly volume since tracking commenced in 2018.”
Canberra
Aaron Bruce, Head of Office Leasing, ACT
What will be the biggest challenge for your market this year?
“Overall tenant demand and transactions in the back half of the year will continue to be challenging as the market deals with the headwinds of large tranches of backfill stock starting to filter back into the market. There is little urgency in decision making across the board across the occupiers that are actively searching the market as many watch and wait, whilst they assess public sector spending and outsourcing trends throughout the balance of 2026. At the same time, we are starting to see the first significant wave of sale campaigns of office assets in the ACT market in the better part of 24 months. A number of these assets have current or future impending vacancies, and many are watching intently to see if any may be withdrawn or considered for alternate use.”
What is the main thing you are telling clients about the market this year?
“Be patient and to be as proactive and creative as possible with the curation of their leasing strategies. With demand potentially remaining subdued in the short term, the owners who demonstrate an ability to provide even small points of differentiation (product quality, timing, commercials etc) are the ones who are currently standing out from the crowd. The same level of patience is also required on the supply side as many potential vacancies (particularly located within the Canberra CBD) are subject to potential current or planned divestment campaigns. As the dust settles on some of these campaigns, the true longer-term picture will start to emerge more clearly as to the level of the long-term vacancy the CBD market will experience, as opposed to some of the current ‘forecasts’.
“Overall tenant demand and transactions in the back half of the year will continue to be challenging as the market deals with the headwinds of large tranches of backfill stock starting to filter back into the market. There is little urgency in decision making across the board across the occupiers that are actively searching the market as many watch and wait, whilst they assess public sector spending and outsourcing trends throughout the balance of 2026. At the same time, we are starting to see the first significant wave of sale campaigns of office assets in the ACT market in the better part of 24 months. A number of these assets have current or future impending vacancies, and many are watching intently to see if any may be withdrawn or considered for alternate use.”
What is the main thing you are telling clients about the market this year?
“Be patient and to be as proactive and creative as possible with the curation of their leasing strategies. With demand potentially remaining subdued in the short term, the owners who demonstrate an ability to provide even small points of differentiation (product quality, timing, commercials etc) are the ones who are currently standing out from the crowd. The same level of patience is also required on the supply side as many potential vacancies (particularly located within the Canberra CBD) are subject to potential current or planned divestment campaigns. As the dust settles on some of these campaigns, the true longer-term picture will start to emerge more clearly as to the level of the long-term vacancy the CBD market will experience, as opposed to some of the current ‘forecasts’.
North Sydney
Rachel Vincent, State Director & Head of Office Leasing, New South Wales
What will be the biggest challenge for your market this year?
“The biggest challenge in North Sydney this year will be converting improving enquiry into genuine leasing commitment. Occupiers remain cautious, and while many are actively reassessing their workplace needs, decisions are taking longer than ever before. Our latest research shows the average deal lead time for transactions over 1,000 square metres is now approximately 13 months, reflecting the level of scrutiny businesses are applying to cost, flexibility and the capital required to relocate or refit their workspace. At the same time, North Sydney is firmly on the map as a high consideration for many CBD tenants as the Sydney market tightens. It offers the amenity of a highly connected micro-city, with strong retail amenity, the Metro, improved public domain and an increasing focus on health and wellness, including new lifestyle offerings such as One Playground and Saint Haven.”
What is the main thing you are telling clients about the market this year?
“The tenant market is highly selective, proactive landlords with quality buildings, strong amenity and fitted solutions and commercial flexibility will outperform, North Sydney is no longer simply an alternative market; it is a compelling, well-connected and increasingly sophisticated workplace destination in its own right.”
“The biggest challenge in North Sydney this year will be converting improving enquiry into genuine leasing commitment. Occupiers remain cautious, and while many are actively reassessing their workplace needs, decisions are taking longer than ever before. Our latest research shows the average deal lead time for transactions over 1,000 square metres is now approximately 13 months, reflecting the level of scrutiny businesses are applying to cost, flexibility and the capital required to relocate or refit their workspace. At the same time, North Sydney is firmly on the map as a high consideration for many CBD tenants as the Sydney market tightens. It offers the amenity of a highly connected micro-city, with strong retail amenity, the Metro, improved public domain and an increasing focus on health and wellness, including new lifestyle offerings such as One Playground and Saint Haven.”
What is the main thing you are telling clients about the market this year?
“The tenant market is highly selective, proactive landlords with quality buildings, strong amenity and fitted solutions and commercial flexibility will outperform, North Sydney is no longer simply an alternative market; it is a compelling, well-connected and increasingly sophisticated workplace destination in its own right.”
Western Sydney
Mark Martin, Director, Office Leasing
What will be the biggest challenge for your market this year?
“The biggest challenge in the west is lack of enquiry / demand. Much of the tenant base is comprised of small businesses, i.e. locally owned accountants, solicitors, professional services, allied health etc., so when there is bad economic news, demand drops away quickly. Although there is leasing ‘activity’, enquiry, inspections, requesting proposals, etc. – the next step in doing a deal can be painfully slow.”
What is the main thing you are telling clients about the market this year?
“What we are telling owners is ‘creativity’ is required in putting deals together. Early access at no charge, some rebate, potential break options, reduced make good – essentially summed up as: be flexible on lease terms.”
“The biggest challenge in the west is lack of enquiry / demand. Much of the tenant base is comprised of small businesses, i.e. locally owned accountants, solicitors, professional services, allied health etc., so when there is bad economic news, demand drops away quickly. Although there is leasing ‘activity’, enquiry, inspections, requesting proposals, etc. – the next step in doing a deal can be painfully slow.”
What is the main thing you are telling clients about the market this year?
“What we are telling owners is ‘creativity’ is required in putting deals together. Early access at no charge, some rebate, potential break options, reduced make good – essentially summed up as: be flexible on lease terms.”
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CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm and a premier provider of critical infrastructure services. The company has more than 155,000 employees serving clients in more than 100 countries. CBRE serves clients through four business segments: Advisory (leasing, sales, debt origination, mortgage servicing, valuations); Building Operations & Experience (facilities management, property management, flex space & experience, critical infrastructure); Project Management (program management, project management, cost consulting); Real Estate Investments (investment management, development). Please visit our website at www.cbre.com.