Melbourne may be facing an extended disruption as a result of COVID-19 but the pandemic period has not stopped the city from overtaking Sydney to become the country's largest CBD office market. 

New research from JLL has indicated a total of 313,700 sqm of Premium and A-Grade projects in the past six months have helped Melbourne reach a new stock total of 5,107,840 sqm, surpassing Sydney’s total of 5,024,240 sqm.

Among the major developments to contribute to the milestone were Cbus Property and Keppel REIT’s Victoria Police Centre at 311 Spencer Street, The Lendlease Two Melbourne Quarter at 697 Collins Street, and 80 Collins Street by Dexus. 

JLL’s Managing Director (Victoria) Craig Shute said the completion of the three projects marked a "real inflection point" in the dynamics of Australian CBDs.  

At a glance: 

• New research from JLL indicated a total of 313,700 sqm of Premium and A-Grade projects in the past six months have helped Melbourne reach a new stock total of 5,107,840 sqm, making it the country's largest CBD office market.
• Among the major developments to be completed recently in the city were Cbus Property and Keppel REIT’s Victoria Police Centre at 311 Spencer Street, The Lendlease Two Melbourne Quarter at 697 Collins Street, and 80 Collins Street by Dexus.
• According to JLL, there is very little vacancy in the market, with 94 per cent of the 313,700 sqm office stock being delivered in 2020 already pre-committed.

The tower at 80 Collins Street. Source: Dexus

"Melbourne is now the largest Australian city in terms of commercial office space and given the growth trajectory in the JLL chart below, this status is unlikely to change," he said.

"This rapid rise is testament to Melbourne’s balanced economic drivers and will result in an increase of national and global investment capital seeking a foothold or looking to expand their portfolios in the city.

"We are confident Melbourne will rebound relatively strongly as we recover from the current COVID-19 restrictions and re-open for business.”

Other projects completed in the Melbourne CBD earlier this year include Mirvac and Suntec REIT’s Olderfleet building at 477 Collins Street, Charter Hall’s Wesley Place at 130 Lonsdale Street, and Cbus Property and ISPT’s Collins Arch at 447 Collins Street. 

Whilst a large amount of supply is being delivered to the market, data from JLL shows there is very little vacancy, with 94 per cent of the 313,700 sqm office stock being delivered in 2020 already pre-committed. 

JLL’s Senior Research Director (Victoria) Annabel McFarlane said significant momentum and strong demand throughout the last 20 years has supported office market development.

Collins Arch at 447 Collins Street. Source: Cbus

“JLL has been tracking office stock in Melbourne’s CBD office market since 1970, when the size of the market was just 1.45 million sqm," she said.

"The most significant contribution to this growth has been Docklands as a new CBD precinct, delivering just over 1 million sqm of new, high quality office stock and pushing Melbourne to now Australia’s largest CBD office market, just larger than Sydney’s CBD office market.

"Melbourne’s CBD office market has accounted for 40 per cent of all CBD net absorption (1.7 million sqm) in the six CBD markets we track.

"This compares to Sydney (739,900 sqm), Canberra (647,600 sqm), Brisbane (542,850 sqm), Perth (293,700 sqm) and Adelaide (291,300 sqm)."

Melbourne and Sydney’s CBD office markets are comparable in size to several major international CBD office markets including Madrid which stands at 6.5 million sqm, Barcelona at 4.9 million sqm and Berlin at 4.5 million sqm. 

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