National vacancy rates in the office market are fluctuating but demand for prime stock is surging across Australia, according to a new report from JLL.  

The report, Tenant Perspectives 2024, reveals a strong year-to-Q3 2024, with 272,700 sqm in positive demand for prime office stock—contrasting sharply with the negative 136,200 sqm of net absorption in secondary stock. 

The report highlights a robust "flight to quality" trend, driven by businesses seeking workplace stability through the implementation of return-to-office mandates. This increasing demand for prime office space reflects a broader push for adaptive, tech-centric work environments that cater to both traditional and modern work preferences. 

“Businesses are now at a crossroads,” noted Michael Greene, JLL Head of Tenant Representation – Australia: “The persistence of hybrid models coexists with a pressing call from CEOs for more defined office days. This shift impacts both the amount and utilisation of space, necessitating the creation of innovative, inclusive environments that strike a balance between cost efficiency and employee satisfaction.” 

The report identifies technology and sustainability as also playing key roles as drivers of demand at the premium end of the market – reshaping office spaces into agile, employee-focused hubs that support diverse work styles and preferences. 

“Organisations are increasingly investing in adaptive, tech-driven workspaces integrating AI and smart systems to boost office productivity and environmental consciousness.” 

The Australian CBD vacancy rate is 15.1% as at Q3 2024. Vacancy rates are lower for premium grade stock at 11.3%. The CBD vacancy rate for A-Grade stock is 16.4% and B Grade stock 15.5%. The quality of A-Grade stock varies greatly across Australia’s CBD markets, and it is common to see tenants upgrade from lower quality A-Grade stock into higher quality A-Grade assets. 

Looking ahead, the report noted 24 new office developments across Australia’s office markets, and eight refurbishments to be completed by 2028. Total stock under construction was measured at 867,800 sqm.  

Demand for office space is being driven by the finance & insurance services industry, followed by public administration & safety, professional, scientific & technical services, manufacturing and rental hiring and real estate services. 

“Overall, the report reveals an Australian office market in 2024 defined by a dynamic blend of resilience and adaptability. 

“By embracing these changes and focusing on strategic workspace solutions, companies are positioning themselves to remain competitive and future-ready in an ever-changing business world.” 

CBD markets at a glance 

Adelaide: The vacancy rate in the Adelaide CBD has decreased, both for prime and secondary office spaces. The premium vacancy rate sits at 6.7% while the A-Grade vacancy rate is 21.9%.

JLL Tenant Representation – Adelaide, Pawanpreet Sidhu, said: “Larger occupiers may take advantage of the latest wave of new stock coming to market as landlords fight for the harder-to-secure, pre-committing tenant. Older assets undergoing major repositioning are presenting as new and good value for smaller to mid-size tenants, and an opportunity to centralise to the city.” 

Brisbane: JLL Tenant Representation – Brisbane, Maddison Taylor, said: “Brisbane’s office market is experiencing supply pressures, with no new supply with availability expected to enter the market until Q1 2026 and several mooted developments placed on pause or converted to alternative uses.  

“The prime vacancy rate in the Brisbane CBD is now below 10%, the first time since pre-COVID-19 and by year end the overall vacancy rate is expected to be at its lowest level since 2012. The prevailing market conditions have led many landlords to adopt a firmer stance in their negotiations. The scarcity of good quality stock is being reflected in recent gross face rental growth, which has been between 8 – 10% in the CBD over the past 12 months. 

“We’re expecting face rental growth to continue into the short term and while still elevated, incentives are beginning to soften in the prime grade market.” 

Canberra: JLL Tenant Representation – Sydney and Canberra, Darlene Haryanto, said: “The Canberra office market continues to stand out among Australian cities, boasting the lowest vacancy rate at 8.9%. Prime grade vacancy rates are even lower at 7.4% in Q2 2024.  

“In contrast, secondary stock is facing challenges, with vacancy rates reaching 12% during the same period. The disparity highlights a clear trend: tenants are gravitating towards higher-quality office spaces that offer flexibility and efficiency.” 

Melbourne: JLL Tenant Representation – Melbourne, Isabel Klem, said: “Melbourne CBD vacancy rates remain elevated, with Premium grade vacancy rates at 17.2%. A-Grade vacancy rates are at 21.7% and 19.5% for B-Grade assets. But don’t be fooled by the high Melbourne CBD vacancy. The market is extremely competitive at the east end of the Melbourne CBD with tenants taking the favourable market conditions to position themselves in the desired Collins Street address. 

Perth: JLL Tenant Representation – Perth, Sean Milentis, said: “The CBD is experiencing two-tiered market conditions, with a clear divide between vacancy levels in prime versus secondary-grade buildings. The number of good quality options for larger, contiguous floors has reduced significantly over the past 6 to 12 months. Overall, however, CBD market conditions remain tenant favoured.” 

The vacancy rate for premium grade assets in Perth is 9.8%, for A-Grade assets 14.9% and for B-Grade assets 20.0%. 

Sydney: JLL Tenant Representation – Sydney, Leah Staats, said, “A two-tier market has become evident in Sydney’s CBD as a result of the flight to quality thematic, despite headline vacancy rates appearing higher and in favour of occupiers. This contrast is most evident in the Premium asset class within the City Core as occupiers have taken advantage of favourable market conditions over the last few years to relocate into higher quality assets.  

“While some buildings in this category boast vacancy rates below 5%, the rest of the Sydney CBD and secondary assets tell a different story. For many Premium assets in the core, vacancy for larger occupiers is limited with very few contiguous or full-floor opportunities. This is pushing demand out into the mid-town and Western Corridor due to lack of choice.” 

Vacancy rates in the Sydney CBD stand at 10.5% for Premium, 19.3% (A-Grade) and 19.3% (B-Grade). 

Download a copy of report here: 

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