# Office vacancy bumps up to 16.1pc amid supply lift > Source: > Published: 2026-08-11 05:52:42+00:00 # Office vacancy bumps up to 16.1pc amid supply lift The national office vacancy rate is stuck at its highest level in three decades as cities deal with an oversupply of stock that is biting hardest in suburban markets. Office vacancy nationally bumped up from 15.8% to 16.1% in the first half of 2026, the Property Council said. Vacancy in central business districts edged up from 14.8% to 14.9%. But in suburban markets it went from 18.3% to 18.9% as tenants shifted to better buildings in major cities. The national vacancy rate was last this high in January 1995 and incentives are elevated as landlords battle to keep tenants while corporate Australia prepares for AI to sweep through the workforce. The market had to digest more new office space coming on than could be absorbed. While some developers are now dumping office projects in Melbourne, other cities are still dealing with new builds conceived when construction costs and interest rates were lower. Occupiers remain active – particularly at the top end – but overall demand was not enough to absorb the space. Some tenants have also shifted to higher end space, driving vacancy up in older buildings in unwanted suburbs. This weaker demand in non-CBD markets offset stronger leasing activity recorded across the major cities, led by Brisbane, Perth, Melbourne and Sydney. A jump in Canberra vacancy outweighed vacancy declines in other CBD markets. Demand for space in suburban markets was negative, while demand for CBDs was positive. High vacancy levels on Sydney’s north shore, the western hub of Parramatta, and Melbourne’s St Kilda Road also hurt the market. CBD markets recorded positive net absorption, where occupied office space at the half year exceeded occupied office space at the beginning of 2026, and premium grade vacancy dropped by 1.2% to 10.2%. Positive demand for office space was concentrated in Brisbane, Perth, Melbourne and Sydney CBDs. Brisbane CBD had the strongest net absorption nationally during the six-month period at 38,785sq m, followed by Perth CBD with 27,528sq m and Melbourne CBD with 26,779sq m. **New market phase** Property Council chief executive Mike Zorbas said the results reflected a new market phase. “The office market has moved from the correction phase to the recovery phase, but it remains a story of quality and location. Major occupiers are seeking the best buildings,“ he said. Zorbas said Brisbane and Perth showed the strongest demand and noted that office development remained highly sensitive to confidence, with planning efficiency also a factor. “The Victorian government in particular needs to change course to a pro-business mindset to support what should be Australia’s second largest economic engine,” he said. Colliers managing director office leasing Cameron Williams said that with premium availability tightening, leasing activity was becoming increasingly concentrated in better-quality A and B-grade assets. CBRE head of investor leasing, Pacific, Tim Courtnall, said that while it was a “slow turnaround, we are heading in the right direction”. “Adelaide, Perth and Brisbane look to be turning the corner quickest in terms of demand, however we are approaching the second half cautiously,“ he said. JLL head of research, Australasia, Andrew Ballantyne, said business confidence would be crucial in shaping demand over the remainder of 2026. *This article first appeared in The Australian as **Office vacancy bumps up to 16.1 per cent amid supply lift**.* ## Related Topics ### UNLOCK INSIGHTS Discover the untold stories of emerging ASX stocks. Daily news and expert analysis, it's free to subscribe. By proceeding, you confirm you understand that we handle personal information in accordance with our [Privacy Policy](https://stockhead.com.au/privacy-policy/).