4 days ago
Major work from home ‘turning point' as employees return the office: ‘Worst behind us'
Australia has reached a 'turning point' as more workers return to the office and vacancy rates begin to stabilise across the country's CBD offices. The shift comes as employers and employees continue to wrestle over work-from-home rights.
Australia's CBD office markets are showing signs of recovery, with some major cities recording positive rates for the first time in years as workers head back to the office. The latest Property Council of Australia data found the CBD office vacancy rate had crept up from 13.7 to 14.3 per cent over the first six months of the year, but this was largely due to a wave of new office spaces hitting the market.
Despite this, Ray White head of research Vanessa Rader said the data suggested 'the worst of the office market correction may be behind us'.
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The Sydney CBD vacancy rate increased from 12.8 to 13.7 per cent, due to high levels of supply outstripping demand.
However, it recorded 56,532 square metres of annual net absorption of space, which was the highest on record since 2016.
'This positive absorption represents a dramatic shift from the negative trends that characterised the market through much of the post-pandemic period and suggests that return-to-office initiatives are gaining genuine traction among Sydney businesses,' Rader said.
Melbourne CBD continues to face the most significant challenges with vacancy and saw rates drop from 18 to 17.9 per cent.
The market saw a positive absorption of 1,446 square metres, which Rader noted was a 'meaningful shift' for the negative absorption recorded over the past three CBD markets recorded a combined net absorption of 63,738 square metres, which was some of the strongest performance in several years.
Property Council chief executive Mike Zorbas said the group had now seen a year and a half of positive demand for office space and there were 'more businesses taking up office space than leaving behind'.
Rader said the recovery appeared to be driven by several factors, including businesses implementing return-to-office policies. There's also demand for more premium CBD buildings.
'While the recovery trajectory remains gradual, the consistent positive absorption across multiple CBD markets suggests a genuine turning point,' Rader said.
'The challenge now will be maintaining this momentum through continued focus on workplace experience and flexible arrangements that meet evolving occupier needs.'
The overall office vacancy rate across CBDs and suburban markets increased from 14.7 to 15.2 per cent, which is still its highest in three decades.
Fears WFH plan will drive workers out of CBD
It comes as the Victorian government pushes to make work from home a legal right.
Under the Australian-first proposal, workers who could reasonably do their job from home would have a right to do so for at least two days a week. This would be for both the public and private sector.
"Working from home saves working people and families time and money, and it makes good workers more productive," Premier Jacinta Allan said.
Property Council Victorian executive director Cath Evans said the work-from-home mandate risked 'undermining confidence' in the office sector and came as it was showing 'green shoots'.
'Flexibility is and will remain core to many workplaces. But decisions about working arrangements should remain a matter between employers and their teams – not mandated by government,' she said.
'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.'
Recent data from CBRE found 63 per cent of Melbourne residents attended the office in the first quarter of 2025, compared to the national average of 74.7 per cent.
Sydney's office attendance was 82 per cent, while Brisbane's was 79 per cent.
