Reading the Room
The unofficial start to the commercial real estate industry’s year is the release of the Property Council of Australia’s (PCA) Office Market Report (OMR) on the first Thursday of February. It remains the respected industry standard and sets the tone for the year.
This year’s Sydney event was once again a full house, with several themes and insights emerging throughout the day.
The Australian office market is around 27,500,000 m2 of office space, anchored by the 6 major capital cities that make up about 70% of the total surveyed. The numbers show 2 main trends; the gradual upgrade of space continues, and tenants are taking less space. The “accordion effect” is in full swing.
Flexibility is a core theme for us in 2026, and it was raised repeatedly throughout the event. While it drives tenant stickiness, the question remains: how flexible will the market actually be?
Supply is still being added, but this is expected to slow. That said, the backfill shouldn’t be overlooked. Choice remains, and in some markets, there is more than enough of it.
Demand is a different thing. It’s so much less certain as the absorption figures show. What impact will the economy, geopolitics, AI etc, have on future demand? This is the one to watch.
Finally, the mood of the room is so important. In 2024, some warned us “survive 2025”. We did and it was a tough year for a lot of the industry. But tough times bring new thoughts and a greater understanding of the market.
Is this the point of realisation? Are we at that next normal?
Keeping it real is a good place to start. It’s shaping up to be a great year for the industry, and we look forward to sharing many more insights over the year ahead.
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