Premium CBD buildings attract major occupiers as development pipeline hits nine-year low
Australia's office market shifted from correction to recovery in the first half of 2026, with demand concentrated in premium-grade CBD assets while new supply remained at its lowest level in nearly a decade, according to data from the Property Council of Australia.
Premium grade vacancy fell 1.2 percentage points to 10.2% over the period, while overall national office vacancy edged up slightly from 15.8 to 16.1%. CBD vacancy held largely steady, moving from 14.8 to 14.9%.
CBD markets collectively recorded positive net absorption over the six months, meaning more office space was occupied at the half-year mark than at the start of 2026. Brisbane CBD led all markets with net absorption of 38,785 square metres, followed by Perth CBD at 27,528 square metres and Melbourne CBD at 26,779 square metres.
"The office market has moved from the correction phase to the recovery phase, but it remains a story of quality and location," said Mike Zorbas (pictured right), chief executive of the Property Council of Australia.
"Major occupiers are seeking the best buildings. Businesses in general continue to seek workplaces that support collaboration, attract talent and provide the offerings people value. Brisbane and Perth are again showing the strongest demand nationwide."
Sublease availability continued to contract across several major markets, a sign of gradual normalisation following the workplace disruption of recent years.
Despite the demand uptick in some CBDs, development activity remained subdued. Only 176,303 square metres of office space was completed nationally during the first half of 2026 — the lowest volume recorded since July 2017.
A further 167,171 square metres is expected to be delivered in the second half of the year. The supply pipeline remains well below long-term averages and is forecast to stay constrained through to 2029.
"Office towers are long-term investments and development decisions are made many years in advance with a view to occupier demand," Zorbas said. "Planning efficiency, investment certainty and broader business confidence all influence the long-term attractiveness of development opportunities. The Victorian Government in particular needs to change course to a pro business mindset to support what should be Australia's second largest economic engine."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
