The occupied stock in Sydney alone grew by a massive 23,546 sqm.
Office sector fundamentals continued to improve in Q2 2025, with positive net absorption across the four major CBDs in Australia.
Melbourne’s occupied stock grew by 11,852 sqm, Brisbane by 5,370 sqm and Perth by 5,901 sqm.
Here’s more from Dexus Research:
Sublease space, an important indicator of the health of the office market, continued to decrease and is now close to average levels. For example, Melbourne’s sublease space has fallen from 3.7% in 2021 to 1.6%. This is massive. It means that after the COVID disruption, most companies have now right-sized their tenancies and growth from here will depend more directly on employment growth, which implies stronger demand going forward.
Companies are taking advantage of this stage in the cycle to upgrade their fit-out and/or location. The prime vacancy rate in Sydney has decreased from 15.8% compared to 16.7% a year ago. Similarly, Melbourne’s prime vacancy is now 18.5% compared to 21.1% a year earlier and in Brisbane, prime vacancy is 6.8% compared to 8.4% a year ago. On the other hand, Perth remains challenging with the prime grade vacancy rate increasing to 17.1% from 15.9%.
Prime effective rent growth has been significant in the Brisbane with a 13.1% uplift over the last year, followed by Sydney at 11.1% and Perth at 1.8%. Tenants continue to seek high incentive levels therefore face rent growth drove these rent increases.
A lack of supply will drive medium term rent growth. The average per annum completions over the next three years in Sydney and Melbourne are 54% and 57% of the last ten-year averages respectively. And with office market rents still well below economic rents, further completions over the next three years are unlikely.
