Asia Pacific Office Outlook 2024

MELBOURNE

K E Y M E S S AG E S

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 After nearly 100,000 sqm of prime office stock hit the market in 2022, new supply in 2023 fell to 80,000 sqm.  Supply is expected to continue to be

 Although net absorption slowed from 2022, it ended 2023 in positive territory.  A resilient labour market has seen employment growth forecasts revised higher in recent quarters.  This is expected to support demand in the short term, as prime net absorption is expected to rebound back above 100,000 sqm by 2025.  Against this backdrop,

 Prime Melbourne CBD office rents maintained a healthy rate of growth in 2023 as vacancy stabilised and inflation put upwards pressure on face rents.  Supported by a strong labour market, incentives are forecast to trend lower over the next several years.  This will support near-term rental growth; net effective rents are expected to increase over 6% annually between 2024 to 2027.

 The post-pandemic recovery has supported a cyclical upswing in tenant demand for Melbourne's CBD office market. Growth is expected to continue, and more limited supply in the near-term should support ongoing rental growth.

comparatively subdued over the next two years, with only 50,000 sqm of stock scheduled to complete in 2024 and 80,000 sqm in 2025.

 The pipeline of new projects is busier

after 2025, with 125,000 sqm expected to complete in 2026 and 140,000 sqm in 2027.

vacancy is expected to continue to trend lower, stabilising around 11% by 2026.