Three recent office completions have helped tip the scales, making Melbourne the largest CBD office market in the country.
JLL Research notes that, with the completions of Victoria Police Centre, The Lendlease Two Melbourne Quarter, and Dexus 80 Collins Street, the Melbourne CBD now boasts 5,107,840sq m of office space, surpassing Sydney’s 5,024,240sq m.
“The completion of these three projects marks a real inflection point in the dynamics of Australian CBDs,” explains Craig Shute, JLL’s Managing Director, Victoria.
“Melbourne is now the largest Australian city in terms of commercial office space and this status is unlikely to change.
“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.”
Of course, Melbourne is a ghost town at the moment, with Stage 4 restrictions meaning it could be quite some time before the CBD reflects such figures.
“We are confident Melbourne will rebound relatively strongly as we recover from the current COVID-19 restrictions and re-open for business,” Mr Shute says.
In total, 313,700sq m of office space has been built in Melbourne CBD in 2020, including projects completed pre-Stage 4, such as Charter Hall’s Wesley Place (55,000sq m), ISPT’s Collins Arch (47,517sq m) and Mirvac’s Olderfleet building (56,584sq m).
Ninety-four per cent of this 2020 influx is pre-committed, meaning vacancy rates are unlikely to rise as a result of this new space.
“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 sq m,” said Annabel McFarlane, JLL’s Senior Research Director, Victoria.
“The most significant contribution to this growth has been Docklands as a new CBD precinct, delivering just over 1 million sq m 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,” Ms McFarlane continued.
“Significant momentum and strong demand throughout the last 20 years has supported office market development.
“Melbourne’s CBD office market has accounted for 40 per cent of all CBD net absorption (1.7 million sq m) in the six CBD markets we track.
“This compares to Sydney (739,900sq m), Canberra (647,600sq m), Brisbane (542,850sq m), Perth (293,700sq m) and Adelaide (291,300sq m).”