Latest data indicates Australian office markets remained robust through Q3

• Four of the six monitored CBD office markets recorded positive net absorption in Q3 2026, and the national vacancy rate fell 0.5 percentage points to 14.8 per cent.
• Melbourne CBD led with 48,000 sqm of net absorption after two negative quarters, while Sydney CBD extended its positive run to 11 successive quarters with vacancy at its lowest level since Q3 2022.
• Limited prime grade space continues to support rental growth, and with a low supply environment expected over the 2029 to 2031 delivery window.

SYDNEY, 12 October 2026 - New research from JLL shows four of the six monitored CBD office markets in Australia recorded positive net absorption in the third quarter of 2026, totalling, indicative of corporate Australia’s capacity to navigate ongoing global economic uncertainty. The headline national vacancy rate improved by 0.5 percentage points to 14.8%, down from 15.3% in Q2.

According to Andrew Ballantyne, JLL’s Head of Research, Australasia, “Business confidence remains patchy as organisations navigate a volatile macroeconomic environment. However, the positive net absorption result shows that organisations are willing to make long-term strategic real estate decisions. High-quality office space provides a physical environment to shape culture and support innovation and productivity initiatives.”

The Sydney CBD extended its positive net absorption streak to eleven successive quarters in Q3 (+17,900 sqm). As a result, vacancy compressed to 13.6% from 13.9% in Q2 – the lowest level since Q3 2022.

“Location and quality continue to be important attributes for organisations. Centralisation remains a supportive theme for the Sydney CBD, while the technology sector (especially fintech) is in expansion mode. With options limited in the Core precinct, more enquiry is gravitating towards higher quality assets in Midtown and the Western Corridor,” said Mr Ballantyne.

Over the 12 months to September 2026, the Sydney CBD recorded prime grade net absorption of 71,200 sqm, compared with 6,500 sqm in secondary assets. Limited options for contiguous space exerts upward pressure on market rents. Sydney CBD prime gross effective rents increased by 8.3% over the 12 months to Q3 2026.

James Montague, JLL’s Head of Office Leasing - Australia, said, “Sydney is following the same trend we are seeing in gateway office markets. The highest quality office assets in New York, London and Singapore are achieving new benchmark rental levels highlighting the important role that office space can play in talent attraction / retention and customer acquisition.”

The positive Sydney CBD net absorption result was not at the expense of non-CBD office markets – North Sydney (+8,600 sqm), Parramatta (+5,300 sqm) and Macquarie Park (+5,200 sqm) all recorded positive net absorption in Q3.

The Melbourne CBD recorded 48,000 sqm of net absorption in Q3, the strongest result of the six monitored markets, and vacancy fell to 19.4% from 20.5% in Q2. The result is a substantial rebound after negative net absorption in both Q1 and Q2.

Mr Montague said, “The Melbourne story is primarily a location one with strong leasing outcomes achieved by assets in the Eastern Core and Parliament. However, leasing enquiry has improved in the Western Core with Collins Street assets benefiting from public transport infrastructure and broader tenant amenity.”

Melbourne’s metro markets were mixed. The Melbourne Fringe recorded 23,500 sqm of net absorption, driven by a 14,800 sqm expansion by a public sector tenant focused on transport infrastructure. The S.E.S office market recorded -11,900 sqm of net absorption, largely due to the withdrawal of assets for residential redevelopment.

The Brisbane CBD recorded negative net absorption of 28,400 sqm in Q3. The result was expected with a large tenant consolidation leading to the release of excess space. Nevertheless, the Brisbane CBD has still recorded positive net absorption of 14,700 sqm over the 12 months to September 2026.

Mr Montague said, “The Brisbane CBD office market remains tight with limited options for prime grade contiguous space. The tightness of the market is pushing tenants towards lease renewal rather than relocation.”

That limited availability continues to support rental growth, with Brisbane CBD prime gross effective rents up 11.8% year-on-year. Since September 2022, prime gross effective rents have risen 46.5% in the Brisbane CBD; this rapid growth compares to a 26.5% increase recorded in the Sydney CBD over the same period.

The Adelaide CBD recorded an eleventh consecutive quarter of positive net absorption in Q3 (+14,700 sqm) and vacancy fell to 13.6% in Q3. The resilience and diversity of the South Australian economy is reflected in the expansionary activity from SMEs across professional services, utilities and insurance sectors. Net absorption was concentrated in prime grade stock at 11,200 sqm, and prime gross effective rents increased by 1.3% quarter-on-quarter (4.1% year-on-year).

“With a shallowing pool of contiguous leasing opportunities within the prime grade, occupiers are increasingly looking at better quality B-grade options to satisfy their requirements,” said Mr Montague.

The Perth CBD recorded 11,300 sqm of net absorption and a reduction in vacancy to 15.4% from 16.0% in Q2. The result was driven by the 20,000 sqm centralisation of a major utilities provider into the CBD, with expansion across the professional services and public administration sectors also supporting demand. Prime gross effective rents increased by 1.2% quarter-on-quarter and 2.4% year-on-year.

Canberra recorded negative net absorption of 5,200 sqm and vacancy increased to 10.7% in Q3. The contraction largely occurred in the small tenant segment (under 1,000 sqm). Following recent large consolidations and higher fit-out costs, there is some uncertainty in the market, reflected in subdued deal volume. The leasing that did occur was primarily tenants expanding their footprint.

Mr Ballantyne said, “Corporate Australia is navigating a raft of local and global factors which have the potential to impact sentiment and trading performance. At an aggregated level headcount growth will be flat over the short-term, but we expect to see expansion related to the digital economy.”

“The development equation has become even more challenging over the past three months – some input costs have increased, while debt has become more expensive. We are moving into a low supply environment over the 2029 to 2031 delivery window. Organisations with upcoming lease expiry will need to be decisive in their decision-making process or risk losing out on their favoured options,” said Mr Montague.

How did Australia’s CBD office markets perform in Q3 2026?

Four of the six monitored CBD office markets (Sydney, Melbourne, Adelaide and Perth) recorded positive net absorption, and the national vacancy rate fell 0.5 percentage points to 14.8 per cent from 15.3 per cent in Q2. The Melbourne CBD recorded the strongest result at 48,000 sqm, following negative net absorption in Q1 and Q2, while the Sydney CBD extended its positive run to 11 successive quarters.

Why did the Brisbane and Canberra CBDs record negative net absorption?

In Brisbane (-28,400 sqm), a large tenant consolidation released excess space, although net absorption remains positive at 14,700 sqm over the 12 months to September 2026. In Canberra (-5,200 sqm), the contraction largely occurred in the small tenant segment (under 1,000 sqm), with some market uncertainty following recent large consolidations and higher fit-out costs.

What is driving rental growth?

A limited supply of contiguous prime space is supporting rents. Over the 12 months to September 2026, Sydney CBD prime grade net absorption was 71,200 sqm compared with 6,500 sqm in secondary assets, and Sydney CBD prime gross effective rents increased by 8.3 per cent over the 12 months to Q3 2026. Brisbane CBD prime gross effective rents are up 11.8 per cent year-on-year.

What is the outlook for the office market?

JLL expects headcount growth to be flat over the short term, with expansion related to the digital economy. Higher input costs and more expensive debt have made development more challenging, and JLL foresees a low supply environment over the 2029 to 2031 delivery window.