Shifting Trends: Average CBD office size continues to contract as relocations replace renewals

November 2023

In the period YTD2023, the average national CBD office size contracted by 5%, a smaller reduction than last year revealing insights into the changing preferences and strategies of businesses.

Sydney CBD has maintained a consistent pattern of reducing office space over the past three years. However, the smaller size categories, specifically those under 1,000 sqm, have mitigated the overall reduction by showcasing significant growth.

In contrast, Melbourne CBD has exhibited a fluctuating trajectory, reporting an average growth of 3% in office size for YTD2023. This positive shift is a stark contrast to the 2022 scenario, where a substantial 31% reduction in size across all categories was recorded.

As organisations grapple with economic uncertainties, headcount fluctuations, and the structural changes brought about by the rise of WFH practices, the volatility in office size categories is expected to persist. Notably, relocations have seen a consistent upward trend over the last three years, signalling a departure from renewals as organisations begin to establish their own workplace framework. 

Market metrics also shed light on a prevailing theme—the flight to quality. On a national basis, tenants have consistently sought the opportunity to upgrade their office space, which is consistent with the Sydney CBD data.  Whereas both Melbourne and Brisbane CBD tenants appear content, with no significant movements between office grades when looking at the data on an average basis.

While cost implications may play a role in these decisions, the ongoing market dynamics suggest that the flight to quality will gain more consideration as businesses stabilise in the coming years.