Eight office projects currently under construction in Melbourne CBD

Another eight projects are being developed in the Fringe.

According to a JLL report, one office project completion was recorded in the Melbourne CBD, with the refurbishment of 226 Flinders Lane delivering 4,216 sqm back into the CBD market. The Fringe market recorded the completion of 14-16 Yarra Street, delivering 2,000 sqm, as the S.E.S recorded no deliveries.

“JLL is currently tracking 8 projects under construction in the Melbourne CBD (172,100 sqm), with a further eight in the Fringe (90,300 sqm), and none in the S.E.S. Of this 262,400 sqm total, 72% is anticipated in 2026,” the report said.

Here’s more from JLL:

The Melbourne CBD recorded positive net absorption of approximately 11,900 sqm this quarter. Demand was primarily driven by small tenant moves (<1,000 sqm) and strong centralisation (15,300 sqm) from Fringe occupiers. Headline vacancy improved to 18.4%.

The Melbourne Fringe recorded a weak net absorption result of -19,200 sqm, while the S.E.S also recorded a negative result of -1,200 sqm. As a result of weak demand in the Fringe, headline vacancy increased to 20.4%, while the S.E.S rate stabilised at 14.7%.

CBD effective rents display growth

CBD prime net effective rents (PNER) rose 2.4% q-o-q to AUD 309 per sqm per annum (-5.8% y-o-y). Fringe PNER fell -0.9% q-o-q to AUD 284 per sqm per annum (-1.5% y-o-y), as the S.E.S remained unchanged at AUD 235 per sqm per annum (-1.2% y-o-y).

Prime CBD yields remained stable at a range between 5.75%-8.00%. Fringe prime yields softened 25 bps on the lower end and held firm on the upper end to range between 6.50%-9.00%. S.E.S prime yields stabilised, maintaining a range between 7.75%-8.75%.

Outlook: Melbourne CBD demand trajectory positive as investment value proposition gains traction

The Melbourne CBD’s near-term demand outlook remains positive, with elevated occupier interest focused on expansion. While the economic environment continues to hinder decision-making, strong H1 absorption highlights growing pressure on available options.

Positivity is emerging in the investment outlook with recent transactions implying pricing benchmarks. Though global uncertainty and Victoria’s property tax environment still undermine investment, investors increasingly recognise the heightening value proposition.