Melbourne CBD: A Sign Of The Times
Monday morning and Sydney airport is its usual busy self. I arrive in Melbourne on time and the traffic jam at the airport is unusual but understandable with the works programme underway.
As we drive through the CBD, the driver and I both notice how quiet the city is. Being around 10:00 am, one would think it would be busier, especially with the immaculate weather. But the energetic and vibrant Melbourne CBD is still quiet.
In each of the meetings that followed, the reasons for such a quiet CBD ranged from it’s normal for Monday, consequences of lengthy lockdowns, and work from anywhere (WFA), whilst others shrugged and acknowledged it is a sign of the times.
Whatever the reason, the CBD was quiet and Property Council of Australia’s latest Office Market Report Melbourne CBD statistics for the first half of 2024 confirmed it;
- Stock 5,237, 846 m2 – Increased from 5,170,349 m2. Melbourne CBD is now bigger than Sydney CBD by 60,000 m2 – an A Grade building
- New supply – 67,437 m2 of new stock was added
- Vacancy – increased from 16.4% to 18.0% with sublease down to 1.6%
- Absorption – net absorption of negative 15,435 m2
- Absorption – 6 month net absorption average in the 5 years to January 2020 was positive 46,071 m2
- Absorption – 6 month net absorption average in the 4.5 years since January 2020 has been negative 17,285 m2
The outlook for this office market varies and will depend on many factors. But the things to watch are:
- The market is close to the point where repurposing is a solution for older obsolete buildings
- As someone mentioned, do the deals if you can
- Flight to value – you don’t have to overpay to upgrade
- Increased activity leads to increased vibrancy on the streets which feeds upon itself and may start to bring back people to the CBD
Like for so many other great cities around the world, it certainly is a sign of the times.
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