CBRE commentary: Property Council of Australia office vacancy statistics February 2026

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 latest PCA figures have confirmed what we have been observing in the market over the past 12 months. The tenant contractionary phase has come to end which is proven by the fact that prime grade net absorption in H2 2025 was the highest since 2017.

“While 2025 observed elevated supply delivered to the market, the next five years will be the lowest period of office supply since the late 1990s. This outlook is helping to drive rents higher due to a combination of declining vacancy and high economic rents.

“We expect national vacancy to tighten in 2026 as momentum in the leasing market continues and about one third of the supply is delivered compared to last year.”

Tim Courtnall, CBRE Head of Investor Leasing, Pacific

“As we closed out 2025, transaction volumes across the country were the strongest for the year. The strongest performing size range was 1,000-3,000sqm with mid-tier firms continuing to seek better workplaces and reposition their brands amongst their peers.

“Sublease vacancy and strong transaction volumes are leading to lowering vacancy rates in all key markets. Whilst markets such as Melbourne and Canberra continue to face headwinds, Sydney, Perth, Adelaide and Brisbane all have turned the corner. These markets are experiencing strong local economies and strong demand from financial, professional and government sectors.

“Looking ahead, we expect the first half of 2026 to follow a similar trajectory to 2025, and then the impact of limited supply and vacancy tightening will lead to a landlord’s market. This will result in strong net effective rental growth and lowering incentives, trends we haven’t experienced since pre-covid.

“Despite the expectation of lowering incentives and effective rental growth, the big question remains: how confident are larger occupiers to make key real estate decisions for the next development cycle - do they pre-commit now or wait? The fundamentals in core commercial hubs are improving and we expect white collar employment to continue to support the positive sentiment in these markets.”

City by city agent commentary:

Sydney 
Rachel Vincent, State Director & Head of Office Leasing, New South Wales

What could be a game changer for your market this year?

“Continued withdrawals of office buildings being converted to alternative uses, residential in particular.”

What will be the biggest challenge for your market this year?

“With vacancy still high in many locations there is still an abundance of supply and the depth of tenant demand is still not optimal to absorb the vacancy in 2026.”

What is the main thing you are telling clients about the market this year?

“Escalation of stock withdrawals will amplify transaction volumes in value sectors of the market. Midtown, southern and western corridor will tighten up fast but need to be careful not to pull up the handbrake too quickly as strategic vacancy in a number of assets will keep a lid on potential for material effective rent growth through 2026, particularly in the Western Corridor.”

Melbourne
Ashley Buller, Head of Office Leasing, Victoria

What could be a game changer for your market this year?

“Similar to most major office markets nationally, the key dynamic in Victoria is the absence of new supply. There are no new developments currently being activated and, based on current pipelines, it appears unlikely that any meaningful new supply will be delivered until around 2030 or 2031. While three projects are scheduled to reach practical completion this year, there is little to follow. Against this backdrop, the activation of any new development in the Melbourne CBD would be highly significant. In particular, the delivery of a genuinely new, premium-grade building in the East End of Collins Street, where opportunities are extremely limited, would represent a major game changer for the Melbourne office market.”

What will be the biggest challenge for your market this year?

“With vacancy sitting at close to 18%, the primary challenge remains the level of structural vacancy, particularly in buildings where owners have undertaken minimal tenant-visible investment. Without upgrades to ground floor lobbies, wellness amenities, third spaces and fitted accommodations many of these assets are likely to remain vacant for an extended period until broader market tightening occurs. At the same time, a widening gap is emerging between high-rise and low-rise stock, along with a growing scarcity of large, continuous availabilities. This is increasingly shifting negotiating power toward landlords for high-quality, with the window for tenants to secure highly competitive terms reducing.”

What is the main thing you’re telling clients about the market this year?

“With elevated vacancy levels, particularly in low-rise assets and tenancies of 2,000 sqm and below, fitted space remains the preferred product for Melbourne tenants and continues to deliver the fastest leasing outcomes. We are also advising clients that centralisation is likely to continue, with fringe and suburban tenants taking advantage of still favourable, tenant-friendly terms in Docklands and edge-of-grid CBD locations.

“While there have been a small number of large tenants exiting the CBD, these remain the exception rather than the rule and are outweighed by ongoing centralisation activity. Finally, tenant demand continues to be driven less by expansionary growth and more by flight-to-quality moves. Most leasing activity is underpinned by occupiers seeking to upgrade their workplace, reset culture, and improve office amenity as part of a broader strategy to encourage higher office attendance.”

Brisbane
Coen Riddle, Director, Office Leasing

What could be a game changer for your market this year, and what is the main thing you are telling clients about the market?

“Patience remains essential. The 2025 Financial Year proved to be the most challenging period since COVID, with notably limited transaction activity. This subdued absorption, alongside the completion of 360 Queen Street and 205 North Quay, is expected to push total market vacancy above 11.5% and Prime vacancy to around 10% in the December 2025 PCA results.

“Encouragingly, the CBD recorded a meaningful resurgence in occupier relocations during H2 2025, driving net absorption in the CBD to more than 30,000sqm. While many of these transactions will not appear in PCA figures until mid‑2026, we anticipate a rapid tightening in Prime vacancy from H2 2026 through to Q1 2029. This period presents a strong opportunity for landlords to further optimise deal parameters and enhance asset performance.

“In the immediate term, however, maintaining occupancy is critical. Although rental growth and incentive compression remain important goals across the Queensland market, minimising downtime and securing strong tenant covenants should remain the primary focus.”

Gold Coast
Tania Moore, Senior Director, Office Leasing

What could be a game changer for your market this year?

“The recently announced 6,500sqm office development, The Base, Robina, scheduled for delivery in 2028, has the potential to be a significant game changer for the Gold Coast market. After four years of sub‑5% vacancy in the A‑grade sector, this project will introduce much‑needed high‑quality office space and provide genuine opportunities for organisations looking to establish or expand their presence on the Gold Coast.”

What will be the biggest challenge for your market this year?

“The major challenge will continue to be the scarcity of quality office accommodation. Existing tenants are facing constrained choice, which is resulting in renewals occurring at rental uplifts of 20–30% in many cases. Sustained low vacancy is also limiting the ability of large interstate or national occupiers entering the South‑East Queensland market to consider the Gold Coast as a viable option.”

What is the main thing you are telling clients about the market this year?

“We are advising clients to anticipate continued strong rental growth across all asset classes. Market fundamentals remain firmly in favour of landlords and, with demand continuing to outpace supply, upward pressure on rents is expected to persist throughout the year. In response, some owners of B‑grade assets are investing in upgrades to lobbies, bathrooms, end‑of‑trip facilities and landscaping to elevate the tenant experience and improve tenant profiles. This is being driven by the performance of the A‑grade sector, where vacancy remains below 3% and annual rental growth has exceeded 9% year on year for the past three years.”

Adelaide
Andrew Bahr, Director, Office Leasing   

What could be a game changer for your market this year?

“Continued strong demand from larger space users and the resulting take of stock in the better A-Grade buildings could see the market tighten significantly by end of 2026.”

What will be the biggest challenge for your market this year?

“Large amounts of high quality, contiguous fitted and non-fitted space are going to become scarce and will support further strong rental growth and the beginning of the reduction in incentives.”

What is the main thing you are telling clients about the market this year?

“Keep presenting the products as best you can, add common amenity like meeting rooms, gyms and lecture theatres – tenants are responding well to this.”

Perth 
James Phelan, Director, Office Leasing

What could be a game changer for your market this year?

“No new developments until at least 2030, and any development that does come is likely to be a sole building occupier, mean Perth occupiers will rely almost entirely on backfill over the next four to six years. The majority of this backfill will be at QV1 where 20,000sqm remains available for lease. This scarcity will place upward pressure.”

What will be the biggest challenge for your market this year?

“Perth has exposure to a mining-focused tenant base, whose businesses can be impacted by global events and their impact on commodity prices. As recent major global events have highlighted there is likely to be ongoing geopolitical and economic uncertainty, and this could slow occupier decision making and hinder leasing activity. However, countering this would be expected growth from more stable occupiers such as SMEs, professional services firms, and government organisations, that are benefitting from Perth’s robust domestic economy and WA’s nation leading population growth.”

What is the main thing you are telling clients about the market this year?

“With a severely constrained supply pipeline expected for Perth CBD over the next five years, the market is likely to experience decreasing vacancy and strong rental growth. Market rents sit significantly below economic rents for new developments, providing scope for strong rent growth and constrained supply over the next five years.

“Barring unforeseen speculative development activity, we expect that there will likely be no new developments in Perth in the foreseeable future. This will lead to increased competition and backfill supply/vacancy of quality accommodation (particularly in Premium and A+ grade stock) getting absorbed and putting upward pressure on rents.”

Canberra
Ravi Soni, Associate Director, Office Leasing

What could be a game changer for your market this year?

“Canberra is experiencing a visible uplift in face and effective rents as a result of new office developments that are being delivered between 2025 and 2027, likely to break records that have been in place for decades.”

What will be the biggest challenge for your market this year?

“We are witnessing impacts of a hybrid public service workforce resulting in efforts to reduce office footprint by key Commonwealth agencies by way of office consolidation and/or relocation.”

What is the main thing you are telling clients about the market this year?

“Quality of the office assets, building amenities and sustainability credentials is front and centre of most large requirements. To remain relevant in a competitive market, a strong focus on these elements is key.”

Western Sydney
Mark Martin, Director, Office Leasing

What will be the biggest challenge for your market this year?

“The challenge in Western Sydney is that although vacancy is high, this is primarily lower grade supply. The shortage of quality stock will limit tenants wanting to move.”

What is the main thing you are telling clients about the market this year?

“In Western Sydney, the expectation is that 2026 is likely to largely mirror 2025.”