Melbourne has Plenty of Office Space. So Why is the Right Space Still Hard to Find?
Melbourne has no shortage of available office space.
According to the latest Property Council of Australia Office Market Report, Melbourne CBD’s office vacancy rate sits at 18.9%, meaning almost one in five offices is currently vacant.
At first glance, that should give businesses looking for a new office an abundance of choice.
But the headline vacancy rate only tells part of the story.
Recent research points to a growing divide between office space that is simply available and office space businesses actually want to occupy. CBRE’s Melbourne Office Market Future report points to a shrinking pool of assets meeting tenant expectations, while Cushman & Wakefield’s Melbourne MarketBeat reports continued demand for prime-grade buildings.
At Sensa Interiors, we see the same issue from a workplace perspective. A tenancy may look suitable based on location, size and rental terms, but whether it can genuinely support the business is another question.
So, with so much office space available, why can the right space still be difficult to find?
High vacancy does not mean every tenancy is suitable
Businesses are rarely looking for office space in general. They are looking for a particular combination of requirements, including:
- the right location
- an appropriate floorplate
- access to public transport
- good natural light
- suitable building services
- amenities and end of trip facilities
- accessibility and environmental performance
- technology capability
- flexibility for future growth or change
The available pool can narrow quickly
Once those requirements are applied, the available options can reduce considerably.
This is particularly relevant for larger businesses that need contiguous space, specific floorplate sizes or locations that work for employees and clients.
CBRE’s Melbourne office research highlights this distinction, pointing to a shrinking pool of buildings meeting current tenant expectations, despite Melbourne’s high overall vacancy.
The question therefore becomes less about:
“Is there office space available?”
and more about:
“Is there office space available that actually works for our business?”
Businesses are becoming more selective about quality
One of the clearest themes in Melbourne’s office market is the preference for higher-quality buildings.
Cushman & Wakefield’s Melbourne office research indicates that demand continues to favour prime-grade buildings, reinforcing the broader flight-to-quality trend.
Quality now means more than appearance
This is not simply about businesses wanting a newer or more impressive address.
The workplace increasingly needs to support activities that can be harder to replicate remotely, including collaboration, mentoring, client meetings, project work, training and informal team interaction.
Businesses are therefore looking more closely at what a workplace enables their people to do, rather than simply how many desks it can accommodate.
The mix of spaces matters
Through our workplace strategy and design work at Sensa, we often see clients looking for a better mix of spaces, rather than simply more or less square metres.
That can mean fewer traditional workstations but more meeting rooms, project spaces, quiet areas, informal collaboration settings and multipurpose spaces.
The floorplate matters as much as the square metres
Two offices of the same size can perform very differently.
Columns, core location, natural light, existing services, circulation and the shape of the floorplate can all influence how effectively a workplace can be planned.
A smaller tenancy may support a business more effectively than a larger one if it can be planned efficiently. Equally, an attractive property may become less compelling once meeting rooms, circulation, services and different work settings are properly considered.
Test the space before committing
This is something we regularly explore with clients through early workplace planning and test fits.
Before committing to a lease, a test fit can help establish:
- how many people the floorplate can realistically accommodate
- whether the required mix of spaces will fit
- how teams could be positioned
- whether meeting and collaboration needs can be met
- how efficiently the tenancy can be used
- whether there are constraints that could affect the fitout
This can turn a property decision from an assumption into something much more informed.
Hybrid work has changed what “the right size” means
Hybrid working has added another layer to the property decision.
An organisation may have fewer people in the office on an average day, but that does not automatically mean it needs proportionately less space.
Average attendance can be misleading
Attendance is rarely distributed evenly across the week.
An office may be relatively quiet on some days but reach capacity when teams come together. Designing around average attendance alone can therefore create problems on peak days.
At the same time, a workplace originally planned around individual desks may now require more meeting rooms, focus areas, collaboration spaces, video conferencing facilities and multipurpose settings.
The result is that a business can technically have enough square metres while still having the wrong type of space.
Demand is becoming concentrated in the spaces businesses want
Overall vacancy can remain high while demand becomes concentrated in particular buildings, precincts and grades of office.
CBRE’s Melbourne Office Market Future report identifies centralisation as a notable trend, with businesses pursuing higher-quality CBD space and taking advantage of relative affordability in parts of the market.
A large volume of vacant secondary stock does not necessarily help a business looking for a high-quality tenancy close to transport, clients, amenity and its preferred talent pool.
In other words, vacancy is not evenly distributed across what tenants actually want.
The current window may not stay this wide
There are also signs that current conditions may not remain this favourable indefinitely.
According to Knight Frank’s Melbourne office market update, tenant demand strengthened during the first half of 2026 while the future supply pipeline is expected to become more constrained.
Knight Frank has also reported that since the beginning of 2025, 62% of Melbourne occupiers taking more than 1,000 sqm have either maintained or increased their office footprint.
That does not mean businesses need to rush into a property decision. But high vacancy should not automatically be interpreted as an unlimited supply of suitable options.
Start with the business requirement, not the building
When a lease expiry is approaching, it can be tempting to immediately start looking at available properties.
At Sensa, we generally encourage businesses to start one step earlier.
Define what the workplace needs to achieve
Before comparing buildings, understand what the workplace needs to achieve.
That means considering projected headcount, utilisation, working patterns, team adjacencies, meeting room demand, client experience, technology requirements, future growth and flexibility.
This forms part of the Discover stage of Sensa’s workplace process.
Then assess the property against the brief
Once those requirements are understood, properties can be assessed against a clearer brief rather than simply against rent, location and total area.
Sometimes the process reveals that relocating is the right decision.
In other cases, the existing office may already be in the right building and location but simply needs to be reconfigured or refurbished around the way the business now operates.
Plenty of space does not necessarily mean plenty of choice
Melbourne’s 18.9% CBD vacancy rate, as reported in the latest Property Council of Australia Office Market Report, suggests a market full of options.
In one sense, it is.
But businesses are becoming more selective about building quality, location, amenity, floorplate efficiency and how effectively a workplace supports their people.
That is why a market with significant vacancy can still make finding the right office surprisingly difficult.
For businesses approaching a lease expiry, the opportunity is not simply to choose from more available properties. It is to use the current market to make a better workplace decision.
At Sensa Interiors, we help businesses understand their workplace requirements, assess potential properties and determine whether renewing, refurbishing or relocating provides the best path forward.
Because before deciding where your next workplace should be, it helps to understand exactly what you need it to do.
