Two Precincts on St Kilda Road Show Promise for Office Space: Knight Frank Research

• Knight Frank has released its latest research report called The residentialisation of St Kilda Road
• The research found there had been a 26.5% fall in office stock on St Kilda Road from its peak in 1992, with 36 office buildings converted to residential since 1995
• Total office stock on St Kilda Road now sits at 631,974sq m, while the dwelling count has surged from 1,243 in 1992 to 8,929 in 2025
• Despite the rise in residential dwellings, there are still two areas on St Kilda Road offering clear agglomeration benefits for office space – the areas within proximity of the newly- built Anzac Station (the Anzac precinct) and The Alfred Hospital

Some areas of St Kilda Road are transitioning towards residential use as the area transforms into a mixed-use precinct, but Knight Frank still anticipates an improvement in future performance for offices in the area – but only in select locations.

The firm’s latest research report, The residentialisation of St Kilda Road found there had been a 26.5% fall in office stock on St Kilda Road since the peak in 1992, with 36 office buildings converted to residential since 1995 – 18 of which have converted since 2010.

Total office stock on St Kilda Road now sits at 631,974sq m, while the dwelling count has surged from 1,243 in 1992 to 8,929 in 2025.

In just the past three years, residential dwellings have increased by 29%, with more apartments currently under construction.

Most office conversions in the last 15 years have occurred within the sub-markets of South Melbourne and 424–480 St Kilda Rd.

Due to the lower part of St Kilda Road (>574) historically holding a series of vacant blocks and alternative assets, not many conversions have taken place in this area. However, this is now changing, and expectations are that with high vacancy rates, the remaining office space will gradually convert over time.

The report found St Kilda Road’s development as an office precinct was initially driven by Melbourne’s need to accommodate an overflow from the CBD, but in recent years the precinct had experienced significant transformation.

This transformation has been driven partly by the rise of high-density residential as well as the emergence of alternative, more attractive office locations in the city fringe and wider CBD such as Docklands, which have squeezed out office demand for certain parts of St Kilda Road.

Knight Frank Head of Research & Consulting, Victoria and report author Dr Tony McGough said office conversions on St Kilda Road had been a natural consequence of the changing dynamics, but select locations still showed future promise for office space.

“While the benefits of locating your office on St Kilda Road have become limited over time, there are two areas still offering clear agglomeration benefits,” he said.

“The first is the area within proximity to the newly-built Anzac Station, which will connect part of the precinct to the CBD via train.

“This major infrastructure addition is expected to revitalise the surrounding office sub-market, that we call the ‘Anzac’ precinct. The new station will provide workers and residents with a two-minute commute to Melbourne’s CBD.

“The second is the area within close proximity to The Alfred Hospital, which had created a health hub amongst the neighbouring office buildings, with very specific agglomeration benefits.

“St Kilda Road generally does still offer affordable offices, close to some of Melbourne’s most affluent suburbs and lifestyle amenities, but outside of the specific areas above, the raison d’être of the precinct has weakened considerably.”

The Knight Frank report found that while the Anzac precinct currently has a vacancy rate of 20% (only marginally higher than the CBD’s 18%), it encompasses 181,575 sqm of office stock—home to the strip’s highest-quality assets—positioning it as a key office hub.

South Melbourne records a slightly lower vacancy rate of 19.6%, though it comprises just 51,944sq m of office stock. With only one building exceeding 5,000sq m, this area is dominated by smaller owner-occupier and strata-titled buildings, several of which may face future conversion risk.

St Kilda Road’s Medical Hub, strategically located adjacent to The Alfred Hospital, has the lowest vacancy rate across all sub-markets at 13.4%.

Conversely, vacancy rates remain significantly elevated in the 424–480 and >574 St Kilda Road segments, at 40.6% and 37.0%, respectively. These sub-markets contain the highest concentration of residential stock on the strip, with more on the way.