Latest data indicates Australian office markets showed resilience through Q2

SYDNEY, 09 July 2026 – New research from JLL shows five of the six monitored CBD office markets recorded positive net absorption in the second quarter of 2026, reflecting the resilience of corporate Australia in an uncertain global macroeconomic environment. The headline national vacancy rate unchanged at 15.3% over the 2025/26 financial year. 

According to Andrew Ballantyne, JLL’s Head of Research, Australasia, “The second quarter results demonstrate the resilience of occupier demand across Australian office markets. While business confidence has been fragmented, organisations continue to progress leasing decisions and remain acutely aware of the importance of real estate as a strategic enabler for their talent and growth strategies.”

The Sydney CBD continues to perform well, recording a fifth consecutive positive quarter of absorption at 9,500 sqm during Q2 and 96,000 sqm over the 2025/26 financial year. The headline vacancy rate compressed to 13.9% - the lowest level since Q1 2023. 

“The Sydney CBD office market resilience story has migrated from the Core precinct to Midtown and the Western Corridor. The positive leasing activity in these precincts highlights the diverse nature of tenant enquiry in the Sydney CBD and a willingness to commit to higher quality assets,” said Mr Ballantyne. 

Across the broader Sydney CBD market, demand continues to mirror a global trend with tenants favouring higher-quality space; prime grade stock recorded net absorption of 105,500 sqm over the 12 months to June 2026, compared to a contraction of 9,500 sqm in secondary assets.

The Brisbane CBD market was the standout performer nationally, recording net absorption of 21,000 sqm in Q2 and 68,000 sqm over the past 12 months to June 2026 – equivalent to 2.8% of total CBD stock. The Brisbane CBD vacancy rate tightened to 10.6%, with prime grade vacancy compressing to 7.7% in Q2 2026.

James Montague, JLL’s Head of Office Leasing - Australia, said “The Brisbane CBD office market is tightening and the options for mid and large sized space users have diminished. In previous market cycles, we would see low vacancy stimulate the next development cycle. However, the current construction environment has created a scenario where required economic rents are high and the challenges in securing a Tier one builder make for a difficult setting to deliver speculative development.”

“Low vacancy is exerting upward pressure on market rents. Over the 2025/26 financial year, prime gross effective rents increased by 8.3% and we are seeing a diverse range of capital sources seeking investment opportunities in the Brisbane CBD,” said Mr Montague. 

Melbourne remains the laggard across Australian office markets. We recorded negative net absorption of 6,300 sqm in Q2 and -23,900 sqm over the 2025/26 financial year. The Melbourne CBD vacancy rate moved higher to 20.5% in Q2 2026. 

“The headline net absorption articulates the challenge of weak economic growth and uncertain business conditions. Organisations face an uncertain revenue outlook and are seeking to manage their fixed and variable costs to maintain margin.” 

“However, the Melbourne CBD is not a homogenous office market and tenant enquiry and activity in the Eastern Core is robust. The Melbourne CBD is diverging not only location, but quality, amenity and public transport accessibility,” said Mr Montague.

The Melbourne CBD prime net effective rental rate rose by 0.7% quarter-on-quarter, illustrating the strong underlying fundamentals of the best quality stock – the elevated vacancy rate is masking the reality of how competitive the market is for these assets.

Melbourne’s metro markets mirrored CBD dynamics, with demand concentrated in high amenity precincts like Richmond and Cremorne, while other precincts face ongoing tenant attrition to the CBD. The Melbourne Fringe and S.E.S office markets recorded -3,700 sqm and -2,800 sqm of net absorption respectively.

The Adelaide CBD recorded a tenth consecutive quarter of positive net absorption in Q2 (+500 sqm). The Adelaide CBD vacancy rate compressed to 14.5%, with prime gross effective rents increasing by 0.4% quarter-on-quarter.

The Perth CBD recorded 4,900 sqm of net absorption and a reduction in vacancy to 16.0% in the second quarter. Leasing activity was most prominent in the mining, public administration, and services sectors, continuing to reflect the Western Australian GSP composition. 

Canberra recorded a relatively stable albeit negative net absorption result of 800 sqm, maintaining the nominal vacancy rate at 10.5%. Consolidation and contraction by a major government department was offset by expansion and the absorption of sublease by two other separate government entities.

Mr Montague said, “The office sector has navigated a volatile macro environment in 2026. While decision-making can be protracted in some lease negotiations, positive net absorption results in most CBD locations highlights an expansion bias from most organisations. The next 18 months will be heavily influenced by business conditions and lease expiry will remain a catalyst of market activity.”

“The development pipeline continues to contract across Australian CBD office markets. It can be argued that the current environment reflects the toughest office development market in history. Over the next 18 months, very few office developments will move from approval to commencement and the 2029 to 2031 delivery window is very low,” said Mr Montague.