Melbourne’s CBD remains the nation’s office vacancy capital, with enough empty space to accommodate almost 83,000 staff as the state government’s work from home laws loom.
New Property Council figures show almost one in five CBD offices remain empty, with vacancy easing just 0.1 per cent to 18.9 in the six months to July 2026.
That figure is still well above Sydney’s 13.3 per cent and Brisbane’s 10.2 per cent.
It leaves more than one million square metres of office space sitting empty in the city – the equivalent of about 50 MCG ovals.
At roughly 12sqm per worker, that vacant space could fit 83,000 workers.
Property Council Victorian executive director Cath Evans said Melbourne’s office recovery remained fragile and warned Labor’s proposed work from home laws were adding to business uncertainty.
“The stabilising of office vacancy is welcome, but Melbourne still has Australia’s highest vacancy rate by a long way,” Ms Evans said.
“We’re hearing from businesses that the proposed work from home legislation is contributing to delays in tenancy decisions and a more cautious approach to future office space requirements.”
The figures come as Premier Ben Carroll faces growing pressure to dump the contentious laws amid fears they will deter investment in Victoria and force more CBD hospitality venues to close.
The Herald Sun revealed small businesses could be exempt, with Mr Carroll signalling the government was open to “sensible” amendments being made in the upper house next week to cater to the concerns of employers.
The pressure is also building on new Treasurer Colin Brooks, who replaced Jaclyn Symes in Tuesday’s cabinet reshuffle and has promised to rebuild the government’s relationship with the business sector.
Ms Evans welcomed that pledge, but said it had to be backed by action.
“Victoria cannot afford more consultation without reform,” she said.
“Businesses are looking for decisions that improve confidence, unlock investment and support economic growth.”
It comes as Victoria records the nation’s highest unemployment rate, with Australian Bureau of Statistics figures showing the jobless rate rose from 4.9 to 5.1 per cent over the past year, the highest level since the state was plunged into its sixth Covid lockdown.
Business figures put the woeful figures down to Jacinta Allan’s slew of “anti-business policies” including legislating the right to work from home two days a week.
CBRE Victorian executive managing director Jarrod Frazer said the proposed laws had only promoted uncertainty at a time when Melbourne should be pushing harder for growth.
“As foreign capital looks towards Australia as a safe haven for investment, Victoria will continue to fall outside of investor preferences as long as this uncertainty remains,” he said.
Fresh JLL Australia research shows Victoria’s office investment market has slumped since the Allan government doubled the Absentee Owner Surcharge in January 2024.
Annual office transaction volumes have fallen more than 62 per cent, from a decade average of $3.4bn to $1.28bn, while foreign investors’ share has halved from 47 per cent to about 25 per cent.
Ms Evans said Mr Brooks needed to remove barriers to investment, starting with the absentee owner surcharge, to help restore Melbourne’s competitiveness and accelerate the recovery of the office market.