Centralisation trend persists in Melbourne CBD’s office market

And sublease vacancy continues to decline.

Centralisation remains evident in the Melbourne CBD according to Dexus Research, with tenants relocating from fringe markets across a diverse industry profile. Demand in Docklands continues to gain momentum, recording another quarter of positive net absorption, totalling 9,620 sqm, mainly driven by Simonds Homes’ move to Collins Square Tower 1, accounting for most of the CBD’s 11,850 sqm absorption.

Here’s more from Dexus Research:

Improved deal flow pulled total vacancy down slightly to 18.4%, though upcoming FY26 supply is expected to keep upward pressure on vacancy, with incentives remaining elevated. Decision making remains slow, JLL notes that 55 briefs above 1,000sqm were released between January and June 2025, with only 7 of these transacted.

Notably, sublease vacancy continues to wind down, now at 1.5%, reflecting progress toward the end of the rightsizing cycle. Stabilised yields are supported by rental growth, driving a 2.2% uplift in capital values over the quarter.