The fundamentals driving Australia’s office developments

• New office developments commence construction with an average pre-commitment rate of 45%

• Pre-commitment rates average 70% at practical completion across national CBD markets

• Occupancy stabilises at 92% within three years post-completion

• Refurbishments follow a different trajectory, with most leasing commitment occurring post completion
  
  Market disparities
   

• Melbourne CBD leads pre-leasing with 65% pre-commitment rate in the two years before completion

• Sydney CBD records lowest pre-commitment rate at 34%, but strong post-completion performance

• Speculative development viable in select markets, with occupancy twice as strong at completion in pre-committed projects

• The length of construction does affect leasing strategies, as timing the supply to upcoming lease expiries can drastically reduce leasing downtime
   

Supply constraints reshaping the landscape

• National CBD completions projected at just 179,000 sqm per annum over 2027-2028

• 20-year average of 390,000 sqm per annum highlights significant supply shortage

• Economic rents now require 65%+ premium in Melbourne, 40%+ in Sydney versus current prime rents

• Construction costs have increased up to 38% with financing costs rising 425 basis points since 2022
   

Download the full Australia's Office Pre-Commitment Market Explained report to discover detailed market-by-market analysis, speculative vs pre-committed development outcomes, refurbishment performance metrics, and strategic feasibility insights for your next project.