Melbourne adds 69,000sqm of new CBD office supply in Q2

There is a further 73,100sqm of space currently under construction.

The Melbourne CBD added 69,000 sqm of new office supply through the second quarter with practical completion of MQT in June, said Colliers in a report. For the balance of the year additional space available across the CBD will represent refurbished office space rather than any new office supply. 

“There is a further 73,100 sqm of new office supply under construction across Mirvac’s 7 Spencer Street (45,000 sqm) and GPT’s 51 Flinders Lane (28,000 sqm) with 435 Bourke Street not anticipated to reach completion until late 2026,” the report added.

Here’s more from Colliers: 

Net absorption was negative across the CBD office market through the 6 months to December 2023 (-26,900 sqm) following negative absorption of -66,150sqm through H1-2023 (latest figures). Premium grade stock recorded positive absorption of 12,300 sqm and highlights the flight to quality trend from tenants. 

Absorption across A-grade stock was negative (-15,200 sqm) through H2 2023 but was a material improvement from that recorded 6 months prior (-60,800 sqm) with elevated negative absorption recorded across secondary stock, particularly across B-Grade buildings (-12,900sqm). 

While absorption has been broadly negative, tenants are increasingly discerning, with higher quality buildings demonstrating a competitive advantage across the market, as is being expressed across Prime-grade buildings within the Eastern Core.