Melbourne’s Office Market Sees Record-breaking Leasing Activity
Melbourne’s office market is leading the charge in commercial leasing, outpacing both Sydney and Brisbane with an impressive 163,100 square metres of office space leased last year.
In the first five months of 2023, an additional 42,776 square metres of deals have already been finalised.
According to Colliers, the surge is being led by privately-owned or locally owned businesses that are able to make swift decisions without seeking overseas approvals, allowing them to be proactive in securing office space.
Previously, smaller companies were dominant in leasing smaller office spaces. This year however, larger tenants have been making their decisions faster resulting in an increase in the average size of deals.
Colliers said upgrading space and location have become priorities for tenants, leading to rapid absorption of new buildings and quality A-grade stock in the city fringe. Vacancy rates have fallen significantly, but lower-grade buildings have experienced an increase in vacancies. While many new office projects have received approval, constraints in the construction industry have delayed some, with expected completions in 2024 and beyond.
The positive outlook remains as office demand strengthens due to low unemployment rates and the growth of white-collar jobs surpassing pre-pandemic levels. The majority of new or A-grade stock is predicted to be absorbed within the next 12 months, further fuelling Melbourne’s thriving office market.