The overall office market vacancy rate for Sydney CBD increased again to 12.2%, the highest vacancy rate for the past decade. Whilst vacancy rates in the Prime grade were lower than in secondary grade across the country, Sydney and Adeliade were the only outliners to this trend. 

As Melbourne’s office workers continue to lag the rest of the country in returning to the CBD office environment, the vacancy rate of the CBD continues to increase to 16.4% as of January 2024.

The Western Australian economy has remained strong due to the resource sector and the constant influx of people into the State from Interstate and Overseas. This is expected to continue albeit at a slightly slower rate.

Brisbane CBD’s vacancy continues to remain low at 11.7% in comparison to other CBD markets across Australia. This has resulted from the increase in demand for prime-grade office space and the withdrawal of secondary-grade stock.

While the headline for Adelaide is that the CBD’s office vacancy is at its highest rate since 1995 at 19.3%, much of this has been driven by both positive tenant demand and supply. New building vacancy is estimated at just 3%, with prime A grade vacancy reported as 22% and secondary vacancy 17.1%.

Large Format Shopping Centres have observed a decline in vacancy, while Neighbourhood Centres and CBD locations remain steady. However, there is a limited space for new development in Large Format and Shopping Centres. Reduced vacancy typically drives higher face rentals and reduced incentives in most retail markets, except for CBD where face rents remain constant. Annual rental increases are on the rise across all markets, with retail typically operating on a CPI plus percentage basis, although CPI has descreased slightly from late 2022 offering some relief to retailers. From a tenant perspective, retail lease norms remain unfavorable, driven by landlords' collective power and market coverage. Despite varying market conditions, landlords are not adequately addressing tenant needs in response to current economic challenges.