Concerning trend in major Aussie city as it struggles to bring workers into the CBD

One capital city is struggling to attract workers back to its once thriving CBD seeing office vacancy rates rise, while other parts of Australia’s market tighten.

The Property Council of Australia released its July 2024 Office Market Report which showed vacancy rates fell 0.2 per cent across Australia in the last six months.

Office vacancy rates nationally are now siting at 14.6 per cent, which is more than 4 per cent above the historical average.

Demand for office space in non-CBD and CBD areas were both positive for the first time since January 2023.

While CBD vacancy rates remained stable at 13.6 per cent, non-CBD areas fell 0.7 points to 17.2 per cent.

Brisbane’s vacancy rate was under 10 per cent for the first time in a decade, decreasing from 11.7 to 9.5 per cent.

Sydney’s CBD office vacancy rate also fell from 12.2 to 11.6 per cent and Adelaide dropped from 19.3 to 17.5 per cent.

But other parts of the country rose, with Melbourne’s vacancy rate rising from 16.6 per cent to 18 per cent with experts saying the city was still facing “stiff challenges.”

Canberra’s market also increased from 8.3 to 9.5 per cent, and Perth’s lifted from 14.7 to 15.5 per cent, driven by a new supply of quality office space.

Property Council of Australia chief executive Mike Zorbas said the Victorian Government simply had to get some of its workforce back into the CBD a few days a week to support what should be a “thriving city.”

He said in other parts of country they continued to see a preference for high quality office spaces, with Sydney and Adelaide being the only capitals to record higher prime vacancy than secondary vacancy.

“Some of the older, lower-grade office buildings that are in lower demand are now being withdrawn from the market to be repurposed through refurbishments or converted into residential spaces or hotels,” he said.

With vacancy levels falling in half of Australia’s CBDs, Mr Zorbas said there was room for very cautious optimism in parts of the market.

“In our CBDs, office supply is continuing to be a driving force for vacancy levels as demand for office space has been positive,” he said.

“This demonstrates businesses still see a CBD location as the best place to do business.