Melbourne CBD Office Market Records Strongest Quarterly Prime Rental Growth Since Q2 2024

The Melbourne CBD office market has recorded the strongest quarterly prime rental growth since Q2 2024, according to the latest research from Knight Frank.

The firm’s Melbourne CBD Office State of the Market report found prime net face rents rose by 2.1% over the June quarter to sit at $735/sq m.

This is the best increase since Q2 2024, when an increase of 2.5% (to $717/sqm) was recorded.

Secondary net face rents in Melbourne’s CBD office market rose by 3.7% over the quarter ending June 30, and now sit at $557/sq m.

The Knight Frank research found prime incentives also fell for the first time since Q1 2023, but just marginally at 0.1%, and they remain elevated at 47.7%.

Knight Frank Partner, Head of Research & Consulting, Victoria Dr Tony McGough said much of the quarter’s rental growth was attributed to the East, where prime rents rose by 6.2% over the quarter to reach $972/sq m.

“In addition to growth being concentrated in the Eastern core, growth was also based around premium buildings,” he said.

“The East, which is the premium precinct for office space in Melbourne, is tightening, and the flight to quality is still playing out, which is driving price growth for the best space.”

The Knight Frank research found there were 56 office leasing briefs that came to the market in the second quarter of 2025, at an average size of 1,227sq m

“The market was stable with Q2 in terms of leasing activity,” said Dr McGough.

“Whilst we are forecasting some rental growth in the Melbourne CBD office market through 2025 and 2026, we expect this to continue to be concentrated on the Eastern Core and premium buildings,” he continued.

“There are very limited ‘new’ premium buildings coming online and a limited pipeline generally going forward.

“Rental growth will be more subdued elsewhere, with high vacancy rates at present meaning supply is able to satisfy demand; however, incentives have peaked, and the overall market is firming up.”