Melbourne vacancies are rising, but the high end is in demand

“All the old vacancies that come [on the market]if the developments are more than five or seven years old, they need to be redeveloped,” he said.

“It’s a must in today’s environment because anything that looks like four walls and empty space will be left behind. People know what they want: lighter, brighter, cooler and more collaborative spaces. »

New showers and changing rooms at 136 Exhibition Street.Credit:Jason South.

The Property Council report highlighted an oversupply of second-grade office space, with 14% of lower-grade buildings empty compared to 12% of prime buildings. The only office space category with increased demand over the past six months was “prime stock” luxury buildings.

“It’s like the residential market these days; if it’s not dressed, it’s going to struggle,” Martinez said.

Ashley Buller, Victorian office leasing manager for commercial real estate agency CBRE, said her firm was also aware of the demand for high-quality office space.

“High-rise and prime rents in East Melbourne have risen sharply, with a number of transactions reflecting improvements of 15-25% from pre-COVID levels,” he said.

The increase in empty offices has continued even as the number of people returning to work in city offices has stagnated. According to the lobby group’s most recent data, office occupancy stagnated at 49% in June.

“We are a little on hold at the moment because we clearly have a spike in COVID in the community, [and] reinforced health messages and advice. But it’s not going to last forever,” Lowcock said.

“We’re having a tough winter, but from what we’ve seen in other cities, we really think Melbourne is capable of increasing office occupancy even further.”

Department for Transport statistics show ridership on Melbourne’s trains and trams has increased from six months ago, but remains well below pre-pandemic levels. In July, average weekday ridership for subway trains was 58% of pre-COVID levels, while streetcars were 67% and V/Line services were 55%.

Credit:Matt Golding

Data shows that the number of pedestrians has increased in Melbourne’s CBD over the past six months, but there are half as many people on foot as before COVID-19.

According to the City of Melbourne, the average number of pedestrians using the Flinders Street Station underpass between 6 a.m. and 10 p.m. jumped 63 per cent, from 11,012 people in February to 17,247 in July.

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Although demand for office space remains stable, Lowcock said the high number of sublets in Melbourne compared to other cities was “a cause for concern” as it indicated tenants had too much unused space.

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