Historic tenant enquiry and growing transactions set the stage for a strengthening CBD to emerge.
The office market in Melbourne’s CBD is robust and adaptive, with recent insights from Colliers revealing a landscape of evolving opportunities and strengths. Despite some challenges, the latest figures indicate that the broader market still shows strong indications of vitality and growth potential with positive signs emerging to propel the market into the second half of the decade.
Recent figures from Colliers highlight a sustained period of strong enquiry, with annual enquiry by area exceeding 600,000 sqm over the last three years. Enquiry by area through 2024 recorded 636,300 sqm and reflected the highest annual enquiry by area over the last decade (exceeding the previous peak of 631,300 sqm through 2018) and 2.5% higher than that recorded through 2023 (620,923 sqm).
Additionally, there were 1,008 enquiries through 2024, the highest count over the last decade and 25% higher than the previous peak in 2022 (810 enquiries) demonstrating robust of positive prospective demand.
The Eastern Core, known as the Paris-end of Melbourne’s CBD, is currently the most sought-after area and holds the tightest occupancy with limited available space. This precinct, encompassing approximately 680,000 sqm of Net Lettable Area (NLA), has only 73,000 sqm of vacant stock, with premium-grade space exhibiting a particularly low vacancy rate of just 8.1% in the context of the rest of the CBD. This high demand is expected to continue, with several major transactions concluded in the last two months of 2024 and several more to be announced in early 2025, likely impacting overall vacancy rates and available office opportunities.
Recent leasing activity and major tenant moves include Corrs’ commitment to 120 Collins Street, The Commons opening their first hub in the CBD at 55 Collins Street, and Tank Stream Lab opening their first Melbourne location at 440 Collins Street. In addition, approximately 60,000 sqm is in advanced negotiations within the Eastern core.
Jonathan Mayes, Colliers Associate Director of Research, explained, “Economic conditions are driving strong demand for fitted office spaces, with 85% of transactions across all size ranges involving fitted offices. This trend highlights a broader focus on enhancing employee experience, a shift driven by evolving employer values emphasising health, well-being, and productivity.”
There has been a significant shift in occupier decision-making over the last 12 to 24 months, with a heightened emphasis on employee experience. This shift, driven by a flexible workforce and changing societal values, ensures that office spaces are adapting to new priorities, encompassing both the quality of the asset and its surrounding amenities.”
Gross leasing activity across Melbourne’s CBD has demonstrated improvement each year from 2021-2024 increasing from 112,000 sqm in 2021 to 164,966 sqm in 2024. Furthermore, this reflects a 19% increase on deal activity recorded 12 months prior.
Through 2024, transaction activity was driven by larger 3,000 sqm+ deals reflecting 46% of transaction through the year. The smaller 0-999sqm deals remained steady (53,000 sqm) following a lift through 2025, while mid-sized occupiers softened -14% to 36,600 sqm.
Andrew Beasley, Regional Director of Colliers Office Leasing, said, “Melbourne CBD occupiers have had to rethink their office strategies more extensively than in other markets to create a holistic experience for their staff. The varying dynamics across precincts will influence market trends in the medium term, with tightening in the Eastern Core driving upward pressure on rents and reducing incentives, which will have a flow on effect for the rest of the market over time.
“As the Eastern Core continues to tighten, it may lead to some short-term backfill vacancies in the Western Core. However, the increasing demand for higher-quality spaces in the Eastern Core will enhance the value proposition of premium stock in the Western Core, driving demand for high-quality available spaces while supporting occupancy through incentives for lower-quality stock.
“Whilst vacancy is high, the other major consideration for the Melbourne CBD Office market will be future new supply, with limited or no major new developments beyond 2026 coming out of the ground with the exception of Mirvac’s 7 Spencer Street, GPT’s 51 Flinders Lane, both seeing strong enquiry and Cbus Property’s 435 Bourke Street, which is already 60% committed. In the long term, this will positively impact the overall vacancy rate, and we will see strong rental growth and a reduction in incentives. This will also assist with driving the economic rents required to get any new development out if the ground, beyond this time,” Mr Beasley said.
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