Tightening Supply and Rising Demand Fuel Momentum in Australia’s Prime Office Market
Tim Molchanoff, Cushman & Wakefield’s Head of Office Leasing Australia and New Zealand, said leasing conditions continue to favour high-quality assets, with a widening performance gap emerging between prime and secondary stock across all major CBD markets.
“Across Australia’s CBDs, occupier demand remains firmly concentrated in premium and A-grade buildings, particularly those located in core precincts offering strong amenity, sustainability credentials and transport connectivity. This has continued to drive rental growth in prime assets, while secondary stock faces softer demand, higher incentives and more limited rental momentum.
“The divergence between prime and secondary markets is becoming increasingly pronounced. Tenants are willing to pay a premium for quality, but remain highly selective, leaving older and less efficient buildings exposed to ongoing vacancy pressure.”
“On the supply side, development pipelines remain constrained by elevated construction costs and feasibility challenges, limiting the delivery of new prime stock in the near term. As a result, competition for high-quality space is expected to intensify, supporting further rental growth across our national markets.
“Looking ahead, leasing conditions are expected to improve, although occupier decision-making is likely to remain selective.
“Demand will continue to favour high-quality, well-located assets, while secondary stock faces ongoing pressure from elevated vacancy and incentive levels. With limited new supply expected in the near term, market conditions should remain broadly supportive, though recovery is likely to be uneven across markets and asset types.”
NSW
Tim Stanway, Cushman & Wakefield’s National Director, Head of Office Leasing NSW said “Developers have become more cautious about speculative supply, moderating near-term completions and tightening the pipeline for prime product.
“That dynamic has reinforced the flight to quality and underpinned stronger leasing momentum for well positioned buildings, while secondary stock remains challenged.
“Looking ahead to 2026, the balance is expected to shift further in favour of prime assets. Landlords that prioritise building performance, adaptable floorplates and tenant experience will be best placed to retain and attract larger occupiers, and tenants should plan leasing programmes accordingly”.
SA
Adam Hartley, Cushman & Wakefield’s Director & Head of Office Leasing SA, reports that Adelaide’s office market closed out 2025 with sustained momentum, underpinned by strong enquiry levels and active tenant movement across all building grades and size categories.
“Demand for smaller, speculative fitted suites continues to dominate, driven largely by small to medium enterprises seeking high quality accommodation without the risk, delays or cost uncertainty associated with bespoke fit outs.
“Larger corporate occupiers are similarly prioritising fitted space, with new non fitted options proving most attractive to government agencies and national or global organisations requiring tailored design elements.
“The strength observed late in 2025 has carried into early 2026, with many tenants progressing leasing decisions and overall enquiry volumes outpacing those seen at the same time last year, indicating that office demand is set to remain resilient.
“Discussions with occupiers reveal that businesses are still navigating the long-term implications of flexible working models, particularly how hybrid arrangements influence future space requirements and the level of amenity expected from modern office buildings.
“Whilst the office vacancy is likely to increase in mid-2026, this is due to new buildings coming online, and not a true reflection of market sentiment. We should experience another year of positive net absorption” he said.
VIC
Ben Ward, Cushman & Wakefield's National Director and Managing Director, Office Leasing, Victoria, said despite a slight increase in vacancy due to new supply, the strong demand heading into the end of 2025 bode well for a strong first half of major leasing transactions.
Melbourne's recovery is underway, stemming from the CBD's Eastern core where we are seeing competitive tension, rental growth and reduced incentives.
With limited new supply for the foreseeable future, coupled with the ongoing trend of Metropolitan occupiers centralising to the CBD we expect to see 2026 drive vacancy toward a more balanced market.
"Occupiers know these favourable conditions won't last forever and we expect a number of major organisations including Ausnet, HostPlus, Marsh & Transurban to make decisions on their accommodation in the first half of 2026."
QLD
Jack Neumann, Cushman & Wakefield, Office Leasing, Brisbane, said Brisbane’s CBD office market is continuing through a period of strength, underpinned by solid demand and tightening supply conditions.
“Brisbane’s CBD is in a really strong position at the moment. Demand for high-quality office space has remained consistently strong, and with very little new prime stock coming to market, the pool of available options is narrowing. This is particularly evident across premium and A-grade buildings, where tenants looking to upgrade are finding fewer choices and are having to move more decisively.
“Looking ahead, we expect these conditions to remain in place. Enquiry levels are still elevated, incentives are continuing to tighten, and competition for space remains strong. With limited new supply on the horizon, landlords are well positioned, and we expect rental growth to remain supported as the market carries this momentum through the year ahead.”
WA
Roly Egerton-Warburton, Cushman & Wakefield’s Managing Director, WA & National Director & Head of Office Leasing, WA said “Like any market that is bouncing off the bottom, the recent data is not reflective of the momentum of transactions we are seeing week-to-week in recent months.
“In Perth, we are experiencing a major uptick in leasing activity across all grades of stock and asset class. This is driven by a resources-driven economy but also supply constraints that are starting to loom.
“Business confidence is up and supply has stalled due to construction costs. We have not seen this point in the cycle for more than a decade.
“Major occupiers now have very few options, and small to medium size firms have far less choice than this time last year. We will begin moving from a tenants’ market to a landlords’ market in 2026”.
