Melbourne to see eight new office projects by late 2027

These projects will yield over 76,000sqm of new stock.

Melbourne’s office market is positioned for a measured recovery through 2026, with demand in the CBD expected to stabilise and investor activity forecast to gradually build, according to a report from JLL.

The Melbourne CBD recorded one project reaching completion over Q4 2025. In the Fringe market, the report said an additional four projects completed; the S.E.S continues to record no supply. The CBD development pipeline is easing after recent completions, with steady additions continuing to be projected in the Metropolitan market.

The Fringe market recorded a strong net absorption result of 33,300 sqm, with headline vacancy improving to 20.7%. One project completed, adding 6,100 sqm to stock.

“There are currently eight projects under construction, on track to deliver 76,500 sqm by late 2027. Prime fringe yields remained at a range of 6.50% – 9.00%, and three transactions were recorded for a combined AUD 113.1 million,” the report added.

Here’s more from JLL:

Headline vacancy in the CBD stabilised over the quarter, with centralisation by large tenants offsetting weak demand amongst the small tenant cohort (<1,000 sqm). The Fringe market recorded a decrease in vacancy owing to strong small tenant uptake and new market entrants in recently completed stock, whilst headline vacancy rose in the S.E.S market.

The CBD headline vacancy rate stabilised at 19.8% as net absorption totalled 1,900 sqm. One project completed over the quarter, adding 5,700 sqm to supply.

The CBD development pipeline has moderated, with four projects currently under construction and on track to deliver 143,000 sqm by early-2028.The prime yield range narrowed to 5.88% – 8.50%. Three sales were recorded over the quarter for a combined AUD 610.5 million.

Prime yields narrowed in the CBD over Q4 2025, with the upper end compressing as transaction evidence indicated yields towards the lower end of the range. The Fringe and S.E.S market prime yield ranges remained unchanged.

The S.E.S market recorded a negative net absorption result of -16,800 sqm. Headline vacancy remained rose 0.4 pps to 15.2%. The S.E.S recorded no project completions. Prime yields were stable, remaining at a range between 7.75%-8.75%.

One transaction was recorded over the quarter for AUD 8.0 million.

Outlook: Melbourne CBD demand recovery through 2026 dependent on overcoming global economic volatility

CBD: The near-term demand outlook indicates stable, moderate absorption. There remains substantial tenants briefs in market, which will support the outlook when concluded. Yields are expected to remain unchanged, and investor activity is expected to gather pace.

Fringe: The Fringe demand outlook suggests moderate levels of demand, as occupier sentiment has shown signs of improvement. Yields are predicted to maintain their present range over the near term, although capital deployment is likely to remain subdued. S.E.S.: Net absorption is likely to reflect a soft but stable result over 2026. Melbourne S.E.S prime yields are now expected to have peaked, with capital likely to come from investors already familiar with this market and the underlying value proposition.