Sydney and Melbourne Office Vacancy Trends Shift

Property Council of Australia data released on August 5 showed Sydney CBD office vacancy fell to 13.3% in July from 13.8% six months earlier, while Melbourne CBD vacancy edged down to 18.9% from 19.0%. The figures came from the industry group’s July 2026 Office Market Report, which tracks office supply, demand and vacancy across Australia’s main business districts. The same report showed Sydney recorded 18,715 square metres of net demand in the six months to July, while Melbourne posted 27,528 square metres. Property landlords and leasing agents said the latest half-year figures pointed to continued tenant demand for higher-quality space. ### How much did vacancy actually move in Sydney and Melbourne? The July 2026 chartbook showed Sydney CBD vacancy falling by 50 basis points to 13.3% and Melbourne CBD vacancy easing by 10 basis points to 18.9%. The same set of figures showed Brisbane at 15.4%, Perth at 14.7%, Adelaide at 11.8% and Canberra at 16.3%. (propertycouncil.com.au) The Property Council said the first six months of 2026 showed businesses moving toward high-quality buildings and prime CBD locations while new development activity remained subdued. Mike Zorbas, the group’s chief executive, said on the council’s Office Market Report page that “major occupiers are seeking the best buildings” and that businesses continued to seek workplaces that support collaboration and attract talent. (propertycouncil.com.au) ### What is behind Sydney’s lower vacancy rate? Colliers said Sydney CBD vacancy “compressed 50 bps to 13.3% over the first half of 2026,” helped by positive net absorption and negative net supply of 5,724 square metres. Jock Gilchrist, Colliers’ head of office leasing in New South Wales, said occupier demand stayed positive for a fourth consecutive period and rose to 18,715 square metres from 11,359 square metres a year earlier. (propertycouncil.com.au) HWL Ebsworth recorded the largest positive net take-up in Sydney at 4,280 square metres, according to Colliers. Gilchrist said several occupiers expanded existing footprints and that some tenant moves reduced floor space without leaving the market altogether. He also said transactions remained concentrated in Sydney’s core precinct, with spillover demand reaching surrounding markets including the western corridor. (colliers.com.au) ### Why is Melbourne still high even after demand improved? Melbourne CBD posted the strongest six-month net demand among the major CBD markets at 27,528 square metres, according to the Property Council chartbook. The same chartbook said Melbourne was the only city to record both a positive net supply rate and a positive net demand rate in the six months to July 2026. (colliers.com.au) The Property Council home page said strong tenant demand in Melbourne more than offset the opening of two new prime office developments, leaving vacancy marginally lower at 18.9%. That left Melbourne with a higher vacancy rate than Sydney despite stronger net demand in the latest half, because new space was still being added to the market. ### What are brokers saying about tenant behavior? (propertycouncil.com.au) Colliers said premium availability was tightening and leasing activity was becoming more concentrated in better-quality A- and B-grade assets. Cameron Williams, the firm’s managing director for office leasing in Australia, said Sydney and Brisbane recorded particularly strong year-on-year growth in A-grade leasing as occupiers faced fewer premium options. Joanne Henderson, Colliers’ head of research in Australia, said headline vacancy figures were masking “important nuances” and that demand was broadening into high-quality A-grade assets. (propertycouncil.com.au) CBRE said inquiry volumes across Australia were up 19% in the first half of 2026 from the same period a year earlier. Tom Broderick, CBRE’s head of office and capital markets research in Australia, said occupiers were prepared to make long-term leasing decisions, while Tim Courtnall, CBRE’s head of investor leasing for the Pacific, said incentives remained high even as owners grew more confident about reducing renewal incentives. (colliers.com.au) ### Where are incentives and fit-outs showing up in the market? CBRE said fitted space was a major issue in Sydney leasing negotiations. Chris Hanley, a senior director in office leasing at CBRE, said 68% of the firm’s Sydney deals above 1,000 square metres in the first half went to fitted space, while 94% of briefs below 1,000 square metres asked for it. He said new speculative suites were costing about A$1,800 per square metre to build against average market net rents of about A$1,430 per square metre. (cbre.com.au) Those figures help explain why landlords are still using incentives and pre-built space to secure tenants even as vacancy edges lower in Sydney and Melbourne. The Property Council’s July 2026 Office Market Report package and its local market events are the next published venues for fuller city-by-city detail from the same dataset. (propertycouncil.com.au) (cbre.com.au)