Recent data reveals that the trend of Australians working from home has contributed to a significant rise in office vacancy rates across major cities, hitting a 30-year high. Currently, around 30 per cent of the workforce is working remotely, causing Central Business District (CBD) vacancy rates to soar to 14.3 per cent in the first half of 2025. This marks the highest level of vacancy since 1995, a time when Australia was still recovering from the 1990s property market downturn.
Vacancy rates have also seen notable increases in cities like Sydney, Brisbane, Canberra, and Perth, although Melbourne experienced a slight decline in its CBD vacancy. Despite this, Melbourne continues to lead with the highest vacancy rate in the nation at 17.9 per cent. The increase in vacancies can largely be attributed to the ongoing preference for remote work. However, a shift in business demand towards higher-quality office spaces has also impacted these figures.
According to Mark Zorbas, the CEO of the Property Council of Australia, the demand for premium office environments has created a continuous supply of new, high-quality spaces in CBD areas, as companies seek attractive workplaces for their teams. These premium offices are experiencing higher demand compared to lower-grade facilities, highlighting a trend in tenant preferences shifting towards superior locations.
The current high vacancy rates are partly a result of extensive construction that occurred at the start of the decade. Over the last five years, approximately 2.6 million square metres of office space has been created, with an additional 200,000 square metres added in just the past six months. This oversupply coupled with the enduring popularity of remote work has significantly altered the dynamics of the office real estate market in Australia.