Vacancy rates continue to rise with large tenants releasing excess floorspace.
Melbourne’s CBD vacancy rose from 14.7% to 16.2%. However, demand remains high for prime grade space. There has been an increase in sub-lease space from the financial sector.
Backfill vacancy opportunities
Some significant large tenants – especially in the finance and government sectors – are consolidating, releasing excess floor space to the market. This trend is likely to continue for the next 2 years. These backfill vacancies create opportunities for tenants who are considering upgrading or relocating.
Third spaces – an important factor in building selection
“Third spaces” are communal spaces, beyond the tenancy, which workers are free to use e.g. larger meeting rooms and informal lounges. They are becoming a critical point in selecting future premises for small–medium tenants, who want to avoid paying for large meeting rooms that are under-utilised.
Flight to quality, CBD & core
The flight to quality trend continues, with small-medium tenants pursuing higher
grade space. Furthermore, many tenants are migrating to the CBD, and especially to
core CBD locations.
The office is not dead, it’s changing
As we return to work in 2024, we see more people in the office. However, office attendance is predicted to remain 10%–15% below pre-pandemic levels for the foreseeable future. The focus is on providing staff with positive and productive work environments to improve office attendance and facilitate hybrid work.
Redefining & redesigning the office
The workplace is in a phase of experimentation, as organisations trial policies, space designs and technology. The trend is to balance “we space” – collaborative space for gathering and creativity – with “me space” – personalised space for focussed work. Organisations must plan space needs based on peak office usage.
Vacancy rates
Melbourne CBD – 16.2%
Melbourne Fringe – 15.1.0%
Source: TRS research.
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