CBD office markets show signs of recovery

Vacancy rates in prime CBD buildings are stabilising as tenants lock in long leases, and the hum of city life is drawing people back to the towers. In fact, the data shows national non-CBD vacancy at 17.2 per cent, with negative absorption of -62,811 square metres over the six months to July 2025.

A prime example is Crows Nest-St Leonards area on Sydney’s lower north shore. It has maintained its position as the office market with the country’s highest vacancy rate, reaching 29.7 per cent in July 2025.

Despite boasting strong public transport connectivity, the area recorded an annual negative absorption of -12,949 square metres.

“This highlights how transport infrastructure that should theoretically support a thriving office precinct alone cannot sustain office demand when CBD alternatives become more attractive,” says Ray White head of research Vanessa Rader.

Post-pandemic market

In the early years after the pandemic, the corporate landscape looked different to how it did before. Hybrid or completely remote work became the norm, while previously workers were expected to attend the office in person full-time.

Workers were eager to trim their commuting times and have more flexible schedules, so suburban offices became the popular choice for businesses. They offered an enticing combination with proximity to home, easy parking, and significantly lower rents than their CBD counterparts.

CBDs regain appeal

However, CBDs have begun to pull ahead once more, proving that the lure of the city is hard to shake.

Ray White’s research shows CBD vacancy rates holding firm at around 10.7 per cent in August, barely above the 10.2 per cent recorded earlier in the year, even as new office towers joined the skyline.

In some cities, the bounce has been stronger again. Adelaide’s CBD vacancy rate, for example,  has fallen from 19.3 to 17.5 per cent.

Demand is surging for premium-grade office space, with a 2.7 per cent lift in occupied top-tier offices in just six months, and a seven per cent rise over the year, according to the Property Council’s July Office Market Report.

Amenities are part of the story, but the appeal of CBDs also lies in their social ecosystem, wherein teams can collaborate in person, clients can be wined and dined, and after-work catch-ups are just downstairs from the office.

Should investors scope the CBD or suburban markets?

For investors deciding on their next move, the choice between a CBD office space and the still-affordable suburbs is far from straightforward. Suburban markets continue to offer lower entry costs and, in some cases, creative conversion opportunities such as trendy warehouses, but higher vacancy rates hint at softer demand.

Many companies are redesigning offices to make them destinations worth travelling to, with top amenities, wellness facilities, and hospitality-style services which all play neatly into the strengths of centrally located towers.