Sydney Office Market Dynamics Q2 2026

• The Sydney CBD office market recorded 39,300 sq.m. of year-to-date net absorption through Q2 2026.
• Vacancy fell to 13.9% in Q2 2026, down 0.7 pps from 14.6% at end of 2025.
• No new supply was delivered in Q1 and Q2 2026.

The Sydney CBD office market maintained positive momentum through Q2 2026, with year-to-date net absorption reaching 39,300 sq.m. Vacancy continued its gradual descent, falling to 13.9%, down 0.7 percentage points (pps) from 14.6% at end of 2025 and 1.6 pps below the 2024 peak of 15.5%. This marks a meaningful shift from the negative absorption recorded in 2022 and 2023, as the medium-term normalisation of vacancy rates reflects a sustained recovery in occupier confidence across the market."

No new supply was delivered in Q1 and Q2 2026, a significant shift from the 76,500 sq.m. and 162,100 sq.m. completed in 2025 and 2024, respectively. The absence of new completions has allowed existing stock to absorb demand more effectively, supporting rental growth. The supply pipeline will continue to influence market dynamics, and the 175,600 sq.m. of stock under construction across four projects represents a 3.3% increase to total stock, providing a partial release valve for growing demand as vacancy rates continue to fall.

Gross effective rents reached AUD 1,135 p.sq.m. p.a., with year-on-year growth of 8.3%, a rate that reflects tightening conditions particularly within premium and A-grade assets. The market continues its momentum in a rising rental cycle."

Vacancy is expected to continue declining as the market moves through a low supply period, with tightening conditions most evident in welllocated, premium and A-grade assets where occupier demand has been concentrated. Tenant preference for high-quality, amenity-rich space is anticipated to continue pushing prime grade vacancy rates down over the near-term.