Melbourne office vacancy remains elevated across key markets

Headline vacancy was at 19.7% in Q1.

Melbourne's office market remained under pressure in the first quarter of 2026, with the CBD, Fringe and South East Suburban (S.E.S.) markets all recording negative net absorption and elevated vacancy levels, according to JLL.

The Melbourne CBD reported vacancy of 19.7%, representing 1.1 million square metres of unoccupied space, while net absorption reached negative 24,600 square metres. One project was completed during the quarter, delivering 45,000 square metres at 7 Spencer Street.

The Fringe market recorded vacancy of 21.4% and negative net absorption of 11,700 square metres, while the S.E.S. market posted vacancy of 15.1% and negative net absorption of 3,900 square metres. New completions were limited outside the CBD, with one Fringe project delivering 12,100 square metres.

JLL noted the CBD pipeline remains relatively constrained, with three projects under construction scheduled to add 98,000 square metres by early 2028.

The consultancy expects CBD leasing conditions to remain subdued through 2026, while Fringe demand is likely to benefit from occupiers relocating from the CBD. Capital market activity is expected to remain measured across all three markets following limited transaction volumes during the quarter.