Various office towers across Sydney and Melbourne are set to have tens of thousands of office space vacant with many leases set to expire in the next 12 months.
A wave of big office tower tenancies ending as corporates increasingly question how much space they need in a work-from-home world is pushing vacancies higher and piling pressure onto landlords.
Across the country’s largest cities, the major companies who have traditionally required large swaths of office space are slowly surrendering to the changed reality of staff wanting to work from home. Some tenants are downsizing; others are tightening belts under the guise of offering flexibility.In Sydney, Commonwealth Bank is set to exit its offices at Darling Park Tower 1 this year.
In Melbourne, National Australia Bank’s former headquarters has about six floors vacant – that’s about 20,000sq m. It’s also trying to sublease one of its old offices at the GPT-owned 800 Bourke St, but it has been unable to find a tenant, leaving the building mostly empty since 2021. “Longer term we remain cautious on the outlook for fundamentals in office as additional supply comes online in both Sydney and Melbourne in a weaker demand environment,” the strategists wrote in a note to clients.
“B and C grade buildings will struggle to get tenants back. They’re not well located and not close to amenities. The bad thing is, there’s going to be a lot of indigestion now,” Mr Cook said. If his outlook is correct, Sydney’s secondary office space, which accounted for 37 per cent of the city’s office stock at the start of the year, could become redundant.
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