Melbourne’s CBD continues to suffer from the the economic strain of post-pandemic shifts in workplace habits, with fresh data revealing almost 18 per cent of city office spaces remain vacant - the highest of any major city across the country.
Almost one in five offices in Melbourne’s city centre sit empty, with fear of a business exodus from Victoria as the Allan government pushes ahead with plans to make remote work a legal right.Melbourne’s CBD continues to suffer from the the economic strain of post-pandemic shifts in workplace habits, with fresh data revealing almost 18 per cent of city office spaces remain vacant - the highest of any major city across the country.
The figure, released in the Property Council of Australia’s latest Office Market Report, shows Melbourne’s CBD vacancy rate had ticked down marginally from 18 per cent to 17.9 per cent. However, the slight dip offers little relief as concerns mount over Premier Jacinta Allan’s plan to enshrine the right to work from home into state law. The legislation, set to be introduced ahead of next year’s election, would grant public and private sector employees the right to work remotely for two days a week, where reasonable. The move has drawn sharp criticism from business leaders who fear it will further erode demand for city office space and deter new investment. “The reality is that investment to drive jobs, upgrade our office assets, and keep our city vibrant will be deterred from Melbourne if this latest policy comes into effect,” said Property Council Victoria executive director Cath Evans. The policy comes as the national office vacancy rate rises to 15.2 per cent, its highest level in three decades, fuelled by weak demand and a glut of new buildings still coming online after being approved during the low-interest rate boom. Premier Jacinta Allan holds a press conference at the Victorian State Labor conference at Moonee Valley race club. Picture: David Crosling In Melbourne, the city is still adjusting to a major shift in workplace culture, with data from CBRE showing just 63 per cent of Victorian workers are returning to the office, well below the national average of 74.7 per cent. Before the pandemic, Melbourne boasted the lowest vacancy rate in Australia at just 3.4 per cent. But the landscape has drastically changed. By early 2022, vacancy had surged to 13.1 per cent before peaking at 18 per cent, where it remained for a full year. Deputy Premier Ben Carroll defended the government’s proposed work from home mandate, saying, “this really helps all people in all types of industries”. However, Dani Matthews, co-founder of corporate advocacy group Abundium, said the policy would place unnecessary burdens on businesses. “Our members say it adds unnecessary cost and compliance burden, and for some, it will force a reconsideration of their future footprint in the state,” she told the Herald Sun. Suburban markets are also struggling, with Melbourne’s St Kilda Road precinct and Sydney’s north shore - areas like Crows Nest - reporting vacancy levels nearing 30 per cent. North Sydney, Macquarie Park, Parramatta and Chatswood are also battling vacancies above 20 per cent. Major new developments in Melbourne, such as Mirvac’s 7 Spencer Street and Cbus Property’s 435 Bourke Street, anchored by Commonwealth Bank, are expected to test the resilience of the market further as they hit completion in the next three years. “There’s no doubt that Melbourne is key to the future success of Australia’s evolving office market,” Ms Evans said. “At a time when many other major cities are recording increases in office vacancy, it’s encouraging to see that Melbourne’s office market is showing green shoots.” The Allan government now faces mounting pressure to reconsider its approach or risk making Melbourne even less competitive on the national stage.
Cath Evans Melbourne Office Vacancy CBD Victorian Workers Melbourne’S CBD Work From Home WFH
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