Ten prime office projects currently under construction in Melbourne CBD 

These projects will deliver over 205,000sqm of new stock by early 2026.

There was one office completion in the Melbourne CBD, with the 69,500 sqm delivery of Melbourne Quarter Tower (pre-commitment level of 35.8%), according to data from JLL. The Fringe recorded five completions delivering 34,449 sqm as S.E.S. recorded one completion (3,090 sqm).

JLL is tracking 10 under-construction projects within the CBD which are expected to deliver 205,663 sqm by early 2026. There are a further ten under-construction projects in the Fringe (111,065 sqm) and two in the S.E.S. (55,000 sqm).

Here’s more from JLL:

The Melbourne CBD market recorded negative net absorption over the quarter, totalling -26,600 sqm. Demand was driven by the small tenant cohort (<1,000 sqm), which resulted in headline vacancy increasing 1.6 ppts to 19.6%.

The Melbourne Fringe market recorded a weak net absorption result of -8,318 sqm, while the S.E.S. recorded a positive result of 10,885 sqm. As a result of weak demand in the Fringe, vacancy increased to 18.8%, as the S.E.S. tightened to 11.6%.

Sales volumes continue to remain weak across all Melbourne markets

CBD prime net effective rents (PNER) fell -0.8% to now AUD 328 per sqm per annum (-6.2% y-o-y). Fringe PNER fell -4.5% to now AUD 288 per sqm per annum (-9.1% y-o-y), and the S.E.S. PNER fell -0.2% to now AUD 238 per sqm per annum (-8.1% y-o-y).

Prime CBD yields range 5.75%–8.00%, down 63 bps on upper end. Fringe prime yields range 6.00%–7.75%, down 12.5 bps on upper and 25 bps on lower end. S.E.S. prime yields range 6.50%–7.75%, down 25 bps on both ends.

Outlook: CBD demand to be upheld by centralisations

The demand outlook for the Melbourne CBD market is anticipated to soften over 2024–2025, a result of cost-cutting measures by occupiers and the persistence of hybrid work. Underlying demand will likely be supported by tenant centralisations.

The absentee owners’ surcharge continues to discourage foreign capital into the Victorian market. Local investors and syndicators are expected to remain the most active participants in the market as the bid-ask spread begins to narrow.