Where Are We At?
Rather than offering a set of predictions before the onslaught of new figures, theories and hopes, we thought it timely to begin 2026 with a recap on where the national office markets currently sit.
Across the six main Australian capital city CBD office markets, vacancy remains above 10%. Over the next couple of years, varying levels of new office space and backfill supply are expected to come onto the market in all capital city CBDs except Perth.
Compared to historical levels, net absorption is very low in Sydney and Melbourne, and closer to long-term averages in the other capitals. Things have changed. Office tenants are gradually leasing less space, with flexible ways of working and evolving office design here to stay.
Industrial demand remained subdued last year but reawakened in the second half as rents stabilised and incentives increased.
As for AI, it is now three years since the launch of ChatGPT, and we have yet to see any highly visible impacts on occupancy in either office or industrial markets. That said, in late 2025, some layoffs at major global firms including IBM, Amazon, Microsoft and Salesforce were attributed to AI. While these developments are offshore, all maintain a presence in Australia.
Data centres are the flavour of the month. I haven’t seen this level of hype since the industrial market surge of 2022–2023.
Looks like a great place to start the next stage of this cycle, and we look forward to keeping you posted.
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