Australia’s office market has plenty of available space, but the options businesses actually want are becoming more concentrated.
The Property Council of Australia’s July 2026 Office Market Report puts national office vacancy at 16.1%, up from 15.8% six months earlier. CBD vacancy remained relatively stable at 14.9%, while non-CBD vacancy increased to 18.9%.
Those headline figures only tell part of the story. Demand varies significantly by location and building quality, while a large proportion of upcoming supply in some markets is already committed. For businesses planning an office move over the next few years, understanding what they actually need from their workplace before entering the property market will become increasingly important.
Property Council of Australia Chief Executive Mike Zorbas described the market as entering a new phase:
“The office market has moved from the correction phase to the recovery phase, but it remains a story of quality and location.”
The Property Council also reported that Premium CBD vacancy fell to 10.2% in the first half of 2026, with major occupiers continuing to seek higher-quality buildings.
Why is office vacancy only part of the picture?
Vacancy rates tell businesses how much office space is available across a market. It does not tell them how much of that space will meet their requirements.
In Sydney, positive demand during the six months to July was concentrated in Premium space, with 19,388 sqm of net demand. B Grade recorded negative net demand of 5,418 sqm over the same period.
Melbourne shows an even stronger divide. A Grade recorded 53,460 sqm of positive net demand in the latest six-month period, while Premium, B Grade and C Grade all recorded negative demand. Brisbane and Perth also saw their strongest demand in A Grade space.
Ben Churchman, Principal Client Relations at Spaceful, says headline vacancy rates can give businesses a misleading sense of how much genuine choice they have.
“Headline vacancy can suggest there is plenty of choice, but once a business factors in location, building quality, amenity, cost and what its people actually need, the shortlist can narrow quickly. If those requirements are defined too late, businesses can lose valuable time and negotiating leverage. Starting with a clear brief puts them in a much stronger position to compare options and act when the right property becomes available.”
Higher vacancy can also create opportunity. Some locations or grades may offer greater choice and better value, particularly where the building has strong fundamentals and the workplace can be designed around what the business and its people need.
What does the future office supply pipeline mean for occupiers?
New supply will create options, although the pipeline is uneven across markets and a significant proportion of upcoming space is already committed.
Sydney has the strongest CBD supply pipeline through to 2028, equivalent to 3.3% of current stock, with 61.6% pre-committed. Melbourne’s pipeline represents 1.9% of current stock and is 67.9% pre-committed, while Brisbane’s pipeline represents 3.8%, with 42% pre-committed. The broader national pipeline also remains below long-term averages and is expected to stay subdued through to 2029.
For businesses with a lease expiry approaching in the next few years, this suggests that waiting for new buildings to come to market does not necessarily mean there will be more suitable choice. Businesses looking for a particular location, floorplate, level of amenity or quality may be competing for a much smaller part of the market than headline vacancy suggests.
Starting early provides more time to compare options, understand the full cost of each property and negotiate without the pressure of an approaching lease expiry.
Should businesses start their property search with a building?
The stronger approach is to start with business needs and use those requirements to shape the property strategy.
“Before comparing properties, leaders need a clear view of how the organisation works today and what is likely to change over the life of the next lease. That includes headcount and growth plans, hybrid working patterns, team behaviours, client requirements, technology, culture and the types of spaces people need to do their best work. That brief can then inform how much space the business needs and which locations and buildings are worth considering,” said Churchman.
For Spaceful, workplace strategy sits at the beginning of the process. Defining space requirements before property negotiations gives businesses greater clarity around their investment and allows property, design, cost and delivery decisions to be considered together.
It can also reduce the risk of committing to more space than the business needs, choosing a building that cannot support its requirements or discovering significant cost and design constraints after lease negotiations are already advanced. In a market where the best options are becoming more concentrated, that preparation can make a material difference to property choice, cost and the long-term value of the workplace.
If your lease is approaching expiry or you’re considering a move, Spaceful can help you understand what your business needs from its next workplace before you commit to a property.