Stabilising yields and shifting buyer dynamics fuel $3.8 billion in transactions, according to Colliers’ Office Middle Markets Report, with NSW and Victoria leading the national rebound.
Australia’s office middle markets are showing signs of resilience and renewed investor confidence, with $3.8 billion in assets transacted nationally in the year to July 2025, just 2.5% shy of the previous year’s total, according to Colliers’ latest Office Middle Markets (OMM) Report.
The bulk of activity was concentrated in the second half of 2024, which saw $2.2 billion in deals, largely driven by developers and opportunistic investors targeting assets for future redevelopment or repositioning. While the first half of 2025 started slower than expected, the market has entered a phase of yield and value stabilisation, signalling the end of the expansionary yield cycle and prompting a broader pool of buyers to re-enter the fray.
Matthew Meynell, Colliers Managing Director, Office Capital Markets and Investment Services, said, “Throughout the year to July 2025 national office markets entered a period of yield and value stabilisation, signalling that the end of the yield expansionary cycle is near and further softening will be minimal. This was the cue that amplified developer investment activity throughout H2 as they looked to move in fast to secure assets for future repurpose and repositioning plans.”
New South Wales led the nation in investment activity, with $1.6 billion deployed across 30 assets. Metropolitan markets dominated, accounting for over $1 billion, more than 60% of the state’s total investment activity. Sydney’s North Shore and West, particularly North Sydney, Parramatta and Chatswood, saw heightened interest. In H2 2024, developers saturated the buyer pool, deploying $473 million, representing a 210% increase from H1 and the highest half-year volume on record, nearly double the previous peak in 2022.
“Strong investment activity from developers across the state was focused in the metro markets, with most interest in Sydney’s North Shore and West specifically North Sydney, Parramatta and Chatswood to the Sydney CBD Fringe. Although focused on the metro region, developers were still active in the CBD Fringe, recording the highest half-year transaction volume on record,” Mr Meynell added.
Victoria followed closely, with $930 million transacted across 29 assets, up 19% year-on-year. The Melbourne CBD led the charge, recording 13 asset sales totalling $607.3 million, an 89% increase from the previous year and the highest annual volume since 2022.
Connor Oghlanian, Colliers Senior Research Analyst, noted, “Melbourne CBD was the most transacted CBD over the year to July 2025 with annual volumes reaching their highest level since 2022. Activity was driven by domestic investors who are able to see beyond headline figures and observe the strong underlying fundamentals. While higher rates of tax and duties applicable to foreign investors is creating a window for domestic investors to deploy capital in the market with less competitive tension.”
While developers led the charge in H2 2024, the first half of 2025 saw a more diverse buyer pool. Government entities (6.1%), institutional investors (6.6%), unlisted funds (15%), and owner occupiers (18%) re-entered the market, reflecting growing confidence in stabilising values and long-term fundamentals.
As the market transitions from uncertainty to strategic repositioning, investors are increasingly recognising that the window for value-driven acquisitions may be closing, making the next 12 months critical for those looking to secure a foothold in Australia’s evolving office landscape.
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