2026-04-23-莱坊-Australian_Office_Indicators_Q1_2026_7页_1mb

Australian Office Market Summary - Q1 2026

Core Content

The Australian office market in Q1 2026 shows a mix of strong rent growth in major capital cities and subdued activity in suburban areas. Key indicators include robust net effective rent growth in CBDs, a focus on high-quality core locations, and a tightening supply pipeline that is expected to support continued rental growth in the medium to long term.

Main Points

• Rent Growth in CBDs:

  • Sydney recorded the highest annual net effective rent growth at 10.2%, the fastest since Q1 2019.
  • Melbourne followed with 6.8%, the fastest since Q1 2020.
  • Brisbane showed 11.7%, the strongest growth among all cities.
  • Suburban Markets: Rent growth remains low, with Southbank being the only suburban area showing 2.7% annual growth.

• Occupier Demand:

  • Demand is heavily concentrated in the core CBD precincts.
  • Sydney's Core and Melbourne's East outperformed other areas, with net effective rent growth of 14.3% and 16.1%, respectively.
  • This has widened the gap between core and non-core areas, with core rents 54% higher in Sydney and 93% higher in Melbourne.

• Investment Activity:

  • CBD office investment started Q1 2026 with $1.1 billion in closed transactions, despite it being a seasonally weak quarter.
  • Sydney was the main driver of investment, with significant deals such as Charter Hall acquiring 50% of O'Connell Precinct for c$500 million and OUE REIT acquiring 19.9% of Salesforce Tower for $357.2 million.
  • Brisbane also saw notable activity, including Ashe Morgan purchasing 60 Albert St for $208 million.
  • Perth and Adelaide had lower transaction volumes.

• Market Uncertainty:

  • The conflict in the Middle East has increased global market uncertainty, leading to higher interest rates and inflationary pressures.
  • This has created immediate headwinds for investors, though the investment momentum from late 2025 may return in H2 2026 if conditions stabilize.
  • Medium-term fundamentals indicate a supply-constrained environment, with interest rates expected to decline by late-2027-2028.

• Yields and Incentives:

  • Average prime CBD yields remained largely unchanged, with Melbourne being the exception, rising to 6.9%.
  • Incentives were stable in most cities, with Brisbane slightly tightening from 37.8% to 37.5% and Adelaide increasing to 34.4%.
  • Higher rates are likely to increase incentives in less-favoured areas.

• Vacancy Trends:

  • CBD vacancy rates rose to 14.8% in H2 2025, driven by new supply in Melbourne and Brisbane.
  • Suburban vacancy is higher, at 18.5%, and non-CBD markets continue to lag.
  • Canberra and Brisbane have the lowest vacancy rates at 10.2% and 11.8%, respectively.
  • Adelaide saw the most significant improvement, with a 0.9% decline in vacancy to 15.5%.

• Supply Pipeline:

  • The development pipeline in major CBDs is forecast to average 160,000 sqm per year over the next five years, 60% below the 10-year average.
  • This tightening supply is expected to support tighter leasing markets and faster rental growth.
  • The conflict in the Middle East may further delay new developments and constrain future supply.

• Absorption Trends:

  • Positive net absorption of 71,541 sqm in H2 2025 across Australian CBDs, with 135,279 sqm over the past 12 months, the strongest since H1 2022.
  • Core locations continue to attract the most demand, with Sydney's Core and Melbourne's East leading.
  • Positive absorption has also spread to neighbouring markets, such as Sydney's Western Corridor and Melbourne's Docklands.

Key Data Points

Outlook

• Sustained demand and declining supply are expected to continue supporting prime rental growth and lower vacancy rates.
• Economic rents remain well above market rents, making new office construction unviable, thus concentrating demand into existing buildings.
• Investor focus remains on core CBD assets, with Sydney being the most active market.

Contact Information

• Alistair Read – Senior Economist

  • Email: Alistair.Read@au.knightfrank.com
  • Phone: +61450831899

• Al Dunlop – Office Leasing

  • Email: Al.Dunlop@au.knightfrank.com
  • Phone: +61290366765

• James Marks – Valuation & Advisory

  • Email: James.Marks@au.knightfrank.com
  • Phone: +61422520110

• Ben Burston – Chief Economist

  • Email: Ben.Burston@au.knightfrank.com
  • Phone: +61290366756

• Rob Sewell – Capital Markets

  • Email: Rob.Sewell@au.knightfrank.com
  • Phone: +612 9036 6847

• Lisa Atkins – Asset Management Services

  • Email: Lisa. Atkins@au.knightfrank.com
  • Phone: +61396044710

Conclusion

The Australian office market is characterised by strong rent growth in major CBDs, concentrated demand in core locations, and a tightening supply pipeline. While suburban and non-CBD areas show weaker performance, the core areas continue to attract significant investment and occupier demand. Market uncertainty due to the Middle East conflict and rising interest rates presents challenges, but long-term fundamentals suggest positive growth and improved market conditions are likely in the coming years.