Melbourne CBD Office Vacancy Remains at National Low

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Skyscrapers in Melbourne

It may seem like positive news for facility managers, but the news that Melbourne’s CBD office vacancy remains at a national low poses serious concerns for the future.

According to a market report released today by the Property Council of Australia, Melbourne CBD’s office vacancy has fallen to 3.3 percent, down 0.3 percent from last year. The figure is also well below the 2018 national average of 9.1 percent.

The Property Council says the drop is a result of higher demand, stock withdrawal, and steady population growth. With no change in these trends forecast, two questions are being asked: how can organisations expand under the current conditions, and where will they go when stock hits critical capacity?

“To 2023, Melbourne CBD will supply approximately 650,000 sqm of new commercial stock”, says Cressida Wall, Victorian Executive Director for the Property Council of Australia.

“However, half of that stock is pre-committed and there is little to no new office space in the pipeline beyond 2023.”

Chart depicting vacancy rates across Australia

Commercial development in the CBD plummeted following changes to the C270 planning controls introduced in 2016. Concern was raised at the time, but little has been done.

“With Melbourne’s population set to match that of Sydney by 2028, immediate action is required to ensure that Melbourne’s CBD is able to accommodate its growing workforce”, says Wall.

“We welcome the State Government’s announcement that changes to C270 are imminent.

“However, until changes are implemented, CBD approvals remain at a standstill. This position is untenable and changes to C270 to support commercial development are the release valve
Melbourne urgently needs if it is to continue to develop as a thriving global commercial hub.”

As for the question about where companies will go, facility managers who want to maintain their current tenants have a better chance of doing so by working with them to develop office buildings as a place they feel connected to. The recent transformation of Sydney’s iconic No.1 Martin Place is one example of how facility managers and tenants can work together to create a sense of community that elevates a building beyond a simple office space.

For more information on the Property Council of Australia’s office market report, click here.

Image credit: 123RF’s ymgerman ©123rf.com

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