Melbourne’s CBD Office Vacancy hits 10 year low; immediate action needed to address looming supply shortage

The office market vacancy rate for Melbourne CBD has reached a 10 year low and remains the lowest of any Australian CBD, according to the Property Council of Australia’s Office Market Report.

The strength of Melbourne’s office market is driven by strong demand - reflecting Victoria’s strong economic fundamentals, population growth, liveability and comparatively affordable rents.

Victorian Executive Director, Cressida Wall, said the overall CBD vacancy rate has dropped from 3.6 per cent to 3.2 per cent over the six months to January 2019.

“Melbourne has a sustained period of strong demand and again boasts the lowest vacancy rate amongst all of Australia’s CBDs,” said Ms Wall.

 “Over the last six months, 98,758 sqm of space was added and 42,134 sqm was withdrawn.

“To 2021, Melbourne CBD will supply over 480,000 sqm of new stock. Pre-commitments for this future stock sit at over 55 per cent.”

Although low vacancy rates show the strength of Melbourne’s commercial office market, concerns remain about the pipeline of future commercial office supply to meet demand beyond 2020. Only two commercial developments have been approved against current C270 planning controls since their introduction over two years ago.

The Melbourne CBD is forecast to grow from 317,500 to 480,400 workers, resulting in a projected need for an additional 4.4 million sqm of commercial floorspace, by 2036.

“A steady and continued supply of high quality commercial office space is crucial to our continued ability to meet demand. We welcome the Government’s announcement that it will review the restrictive and inflexible C270 planning controls and call for this to occur as a matter of urgency,” said Ms Wall.

Media contact: Cressida Wall | M 0415 831 603 | E cwall@propertycouncil.com.au