Property Council ACT & Capital Region Executive Director Ashlee Berry said Canberra remains one of the nation’s most important office markets, but the latest results highlight the challenges facing the city centre.
“Canberra’s office market has experienced a significant shift over the past six months, with more than 52,000 square metres of new supply entering the market and demand moving into negative territory,” Ms Berry said.
“The headline vacancy rate has increased from 10.2 per cent to 14.7 per cent, but the story is not uniform across the market.”
The latest report shows vacancy in Civic increased from 12.0 per cent to 26.4 per cent, driven by negative demand of 116,934 square metres, while the broader non-Civic market remained relatively stable, increasing only modestly from 9.4 per cent to 9.6 per cent despite substantial new supply.
“The challenge for Canberra remains Civic. While the broader market has proven relatively resilient, vacancy in the city centre has increased significantly and that has implications for businesses, workers and city vitality,” Ms Berry said.
“If Canberra wants to function as a network of thriving centres, Civic must remain the anchor. A strong city centre supports investment, employment, retail activity and confidence across the entire territory.”
Ms Berry said the results also reinforced the divergence between different types of office stock.
The report shows A Grade vacancy increased from 8.4 per cent to 13.6 per cent, while B Grade vacancy increased from 11.0 per cent to 19.3 per cent. C Grade was the only segment to record an improvement, with vacancy falling from 14.5 per cent to 13.7 per cent following positive net absorption and building withdrawals.
“Not all parts of the market are moving in the same direction. The fact that C Grade vacancy improved shows there is still demand for the right product in the right location, but owners need policy settings that support reinvestment, refurbishment and renewal.”
Ms Berry said the relatively constrained development pipeline provided an opportunity for the market to stabilise over the coming years.
Only 15,000 square metres of new space is scheduled to enter the market in the second half of 2026, followed by 40,113 square metres in 2027. A further 74,919 square metres is expected from 2028 onwards, with 162,984 square metres currently mooted.
“With limited supply coming online over the next 18 months, there is an opportunity to focus on improving demand, supporting office attendance and creating the conditions that encourage investment back into the city centre,” Ms Berry said.
“The ACT Government can play an important role through planning reform, supporting building renewal, progressing Lease Variation Charge reform and backing measures that improve the attractiveness and vibrancy of Civic.”
