Office vacancy rates have climbed in all Australian capital cities except Canberra, according to the Property Council of Australia’s latest report. This upward trend reflects a significant shift in commercial real estate trends as businesses reassess their physical requirements. The Property Council of Australia prepares the report in collaboration with leasing agents for January and July, providing a full measure of stock, vacancy, and upcoming supply across the country’s major commercial markets. The 1H2021 Office Market Report specifically highlights that the overall vacancy rate for CBD markets is 11.1 per cent, marking the highest level since 2015.

High vacancy in major cities

Sydney’s CBD saw vacancy rise to 8.6 per cent, up from 5.6 per cent six months ago and 3.5 per cent in January 2020. As Australia’s biggest market, Sydney’s vacancy figures serve as a key indicator for the broader economy. Melbourne followed with 8.2 per cent of its offices empty, a sharp increase from the historically low rate of 3.2 per cent recorded a year ago. That city too has recorded a sharp rise over the past 12 months; vacancy was 5.8pc last July. According to the PCA, 35.3pc of upcoming stock there is pre-committed – less than most other cities.

Brisbane’s vacancy sits at 13.6 per cent, slightly below the national CBD average of 11.1 per cent. This rate has remained steady since the start of last year, hovering around 12.7 per cent. Six months ago the Queensland capital had a vacancy rate of 12.9pc – similar to the start of last year. About 53.4pc of its upcoming supply has been rented. Adelaide reports 16 per cent of workplaces unoccupied, while Darwin has the highest vacancy rate at 19.7 per cent.

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The most extreme figure comes from Perth, where 20 per cent of CBD workplaces are empty. This is the highest percentage of unoccupied buildings in the country. This figure represents a significant increase from 18.4pc in July, 2020, and 17.5pc a year ago. Hobart has the highest occupancy rate at 94.9 per cent, which helps balance the national data.

Canberra’s stability

Canberra is the only capital where vacancy did not rise. The city recorded a vacancy rate of 10.1 per cent, unchanged from six months ago. Unlike Sydney and Melbourne, where vacancy has jumped significantly, Canberra’s rate has remained relatively stable. A high portion of the city’s upcoming supply, 53.4 per cent, has already found occupiers. Of its upcoming office product, only 22.9pc is pre-committed.

The report covers CBD markets and non-CBD sectors, including city fringe and key suburban precincts. For non-CBD sectors – including city fringe and key suburban precincts – it averages 13.4pc. While these numbers provide a snapshot of the current market, they do not account for the shift in work patterns that has accelerated over the past year. More than half (55.2pc) of upcoming product is pre-committed. As companies continue to evaluate their physical footprint, the demand for traditional office space may not recover as quickly as the vacancy data suggests.