Let’s take a look at what’s happened in the Canberra property market over the past six months in terms of office rent, vacancy and new supply.
As of January 2025, Canberra maintained the lowest office vacancy rate amongst Australia’s capital cities, with overall vacancy edging down to 9.2% - below the city’s 10-year average of 10.8%. This reflects a modest 0.3 percentage point decrease over the second half of 2024, supported by a positive net absorption of 20,419 sqm despite broader market challenges and a backdrop of rising supply.
Prime vacancy declined from 8.8% in H1 2024 to 7.6% in H2, a 1.2% improvement driven by continued flight-to-quality trends and solid tenant activity in premium-grade assets. Within the Civic precinct, prime vacancy was recorded at 10.7%, while the non-Civic precinct remained extremely tight at just 2.9%.
Conversely, secondary vacancy increased from 10.4% to 11.5% over the same period, driven by weaker demand and negative net absorption of -11,502 sqm. While overall secondary vacancy reached 11.5%, there was a clear divergence across precincts. The Parliamentary precinct recorded a notably low vacancy rate of just 4.1%, highlighting strong tenant demand, while Civic sat at 9.1%. In contrast, vacancy in the Town Centres climbed to 22%, underscoring the growing pressure on lower-grade assets in less central locations.
In 2024, a total of 53,985 sqm of new office space was delivered, in line with the long-term average. Key completions included 18 Marcus Clarke Street (27,000 sqm), 7 London Circuit (8,500 sqm), and 2 Faulding Street (6,600 sqm).
Looking ahead, Canberra is entering a significant phase of new supply that’s expected to reshape its office market over the next four years. In 2025 alone, 149,485 sqm of new office space is forecast to be delivered - well above the 10-year historic average of circa 50,000 sqm. Then from 2026 to 2028, over 250,000 sqm of additional space - across both new developments and refurbishments - is set to enter the market.
Notable new and refurbished developments projects to be delivered in 2025 include:
In Canberra’s Civic office market, rental conditions remained stable in Q4 2024. Prime gross face rents edged up 0.5% to $553, while secondary increased from $438 to $445. Net effective rents remained unchanged for prime at $317, while secondary climbed slightly to $202 from $198. Even with vacancy tightening, incentives remained elevated, holding at 26.5% for prime and 29.2% for secondary.
This trend is also evident in the non-Civic market, where secondary incentives rose to 27.1% in Q4 2024, despite effective rents remaining largely stable at $210. While prime incentives in the non-Civic segment declined slightly to 24.9%, the broader vacancy figures and rental trends reflect a deepening divide between high and low-quality stock across Canberra.
We expect incentives for secondary office space to increase, following the rise in vacancy levels in the latter half of 2024. This is being driven by the ongoing flight to quality, with tenants relocating to higher-grade assets and leaving behind lower-grade stock.
Canberra’s office market continues to show relative stability, with a vacancy rate of 9.2% as of early 2025, remaining below both the city’s 10-year average of 10.8% and the national average of 13.7%. While other capital cities face higher levels of oversupply, Canberra’s more measured growth helps maintain balance, providing a more consistent environment for tenants seeking well-located, quality office space. However, as the supply pipeline increases in 2025 and beyond, we expect to see vacancy rates increasing in the future.
Canberra is on the cusp of a major supply cycle, with over 175,000 sqm of new office space forecast to be delivered over the next two years alone - more than triple the 10-year historical average. This wave of completions, including major projects like 115 Sydney Avenue (37,000 sqm) and One City Hill (34,000 sqm), is set to dramatically reshape the city’s office landscape. It will provide tenants the opportunity to secure prime office space in submarkets that have historically had limited availability, especially in Parliamentary precincts.
This influx of high-quality space will create more choice for tenants, placing downward pressure on face rents and increasing incentives - particularly for secondary stock and fringe locations. Tenants with upcoming lease expiries should be in a stronger negotiating position, while landlords of some older assets may be forced to refurbish to remain competitive.
Longer term, this level of supply could increase vacancy rates and drive a more pronounced flight to quality, as occupiers prioritise sustainability, amenity, and location in their leasing decisions.
In recent years, Canberra's commercial property market has seen consistent investment, particularly in assets with secure, long-term government leases. Transactions such as the acquisitions of 18 Canberra Avenue and 2 Constitution Avenue reflect this ongoing confidence. Additionally, developments like Capital Property Group's $650 million mixed-use precinct on London Circuit are set to expand the CBD towards Lake Burley Griffin, introducing new office spaces and amenities. For tenants, these developments may present opportunities in emerging precincts or recently upgraded assets, where landlords are keen to secure long-term occupants in a competitive leasing environment.
Canberra’s office market is demonstrating a clear flight to quality, as occupiers increasingly prioritise better-located, modern, and energy-efficient office space. This trend is evident in the divergence between prime and secondary vacancy rates. In the second half of 2024, prime vacancy in Civic fell from 8.8% to 7.6%, while secondary vacancy increased from 10.4% to 11.5%. The strengthening in prime absorption, alongside stable effective rents and incentives, suggests tenants are continuing to gravitate toward higher-quality stock even amid broader economic uncertainty.
Secondary space has seen a spike in vacancy and negative net absorption of (-11,502 sqm) despite higher incentives, reflecting reduced demand and a growing preference to upgrade space rather than renew in older buildings. This trend is expected to continue as new supply enters the market from 2025 onward, giving tenants even more options at the upper end of the quality spectrum.
Tenant CS is a commercial tenant representation firm that provides tenant advisory services to businesses. We work across Australia, focusing on Canberra, Sydney, Melbourne, Brisbane, Perth and Adelaide.
We represent you, the tenant, and give you a competitive advantage when it comes to finding office space or negotiating a commercial lease.
Are you on the hunt for tenant representation services in Canberra?
Book a call with our team today to find out how we can help you!
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Let’s take a look at what’s happened in the Canberra property market over the past six months in terms of office rent, vacancy and new supply.
As of January 2025, Canberra maintained the lowest office vacancy rate amongst Australia’s capital cities, with overall vacancy edging down to 9.2% - below the city’s 10-year average of 10.8%. This reflects a modest 0.3 percentage point decrease over the second half of 2024, supported by a positive net absorption of 20,419 sqm despite broader market challenges and a backdrop of rising supply.
Prime vacancy declined from 8.8% in H1 2024 to 7.6% in H2, a 1.2% improvement driven by continued flight-to-quality trends and solid tenant activity in premium-grade assets. Within the Civic precinct, prime vacancy was recorded at 10.7%, while the non-Civic precinct remained extremely tight at just 2.9%.
Conversely, secondary vacancy increased from 10.4% to 11.5% over the same period, driven by weaker demand and negative net absorption of -11,502 sqm. While overall secondary vacancy reached 11.5%, there was a clear divergence across precincts. The Parliamentary precinct recorded a notably low vacancy rate of just 4.1%, highlighting strong tenant demand, while Civic sat at 9.1%. In contrast, vacancy in the Town Centres climbed to 22%, underscoring the growing pressure on lower-grade assets in less central locations.
In 2024, a total of 53,985 sqm of new office space was delivered, in line with the long-term average. Key completions included 18 Marcus Clarke Street (27,000 sqm), 7 London Circuit (8,500 sqm), and 2 Faulding Street (6,600 sqm).
Looking ahead, Canberra is entering a significant phase of new supply that’s expected to reshape its office market over the next four years. In 2025 alone, 149,485 sqm of new office space is forecast to be delivered - well above the 10-year historic average of circa 50,000 sqm. Then from 2026 to 2028, over 250,000 sqm of additional space - across both new developments and refurbishments - is set to enter the market.
Notable new and refurbished developments projects to be delivered in 2025 include:
In Canberra’s Civic office market, rental conditions remained stable in Q4 2024. Prime gross face rents edged up 0.5% to $553, while secondary increased from $438 to $445. Net effective rents remained unchanged for prime at $317, while secondary climbed slightly to $202 from $198. Even with vacancy tightening, incentives remained elevated, holding at 26.5% for prime and 29.2% for secondary.
This trend is also evident in the non-Civic market, where secondary incentives rose to 27.1% in Q4 2024, despite effective rents remaining largely stable at $210. While prime incentives in the non-Civic segment declined slightly to 24.9%, the broader vacancy figures and rental trends reflect a deepening divide between high and low-quality stock across Canberra.
We expect incentives for secondary office space to increase, following the rise in vacancy levels in the latter half of 2024. This is being driven by the ongoing flight to quality, with tenants relocating to higher-grade assets and leaving behind lower-grade stock.
Canberra’s office market continues to show relative stability, with a vacancy rate of 9.2% as of early 2025, remaining below both the city’s 10-year average of 10.8% and the national average of 13.7%. While other capital cities face higher levels of oversupply, Canberra’s more measured growth helps maintain balance, providing a more consistent environment for tenants seeking well-located, quality office space. However, as the supply pipeline increases in 2025 and beyond, we expect to see vacancy rates increasing in the future.
Canberra is on the cusp of a major supply cycle, with over 175,000 sqm of new office space forecast to be delivered over the next two years alone - more than triple the 10-year historical average. This wave of completions, including major projects like 115 Sydney Avenue (37,000 sqm) and One City Hill (34,000 sqm), is set to dramatically reshape the city’s office landscape. It will provide tenants the opportunity to secure prime office space in submarkets that have historically had limited availability, especially in Parliamentary precincts.
This influx of high-quality space will create more choice for tenants, placing downward pressure on face rents and increasing incentives - particularly for secondary stock and fringe locations. Tenants with upcoming lease expiries should be in a stronger negotiating position, while landlords of some older assets may be forced to refurbish to remain competitive.
Longer term, this level of supply could increase vacancy rates and drive a more pronounced flight to quality, as occupiers prioritise sustainability, amenity, and location in their leasing decisions.
In recent years, Canberra's commercial property market has seen consistent investment, particularly in assets with secure, long-term government leases. Transactions such as the acquisitions of 18 Canberra Avenue and 2 Constitution Avenue reflect this ongoing confidence. Additionally, developments like Capital Property Group's $650 million mixed-use precinct on London Circuit are set to expand the CBD towards Lake Burley Griffin, introducing new office spaces and amenities. For tenants, these developments may present opportunities in emerging precincts or recently upgraded assets, where landlords are keen to secure long-term occupants in a competitive leasing environment.
Canberra’s office market is demonstrating a clear flight to quality, as occupiers increasingly prioritise better-located, modern, and energy-efficient office space. This trend is evident in the divergence between prime and secondary vacancy rates. In the second half of 2024, prime vacancy in Civic fell from 8.8% to 7.6%, while secondary vacancy increased from 10.4% to 11.5%. The strengthening in prime absorption, alongside stable effective rents and incentives, suggests tenants are continuing to gravitate toward higher-quality stock even amid broader economic uncertainty.
Secondary space has seen a spike in vacancy and negative net absorption of (-11,502 sqm) despite higher incentives, reflecting reduced demand and a growing preference to upgrade space rather than renew in older buildings. This trend is expected to continue as new supply enters the market from 2025 onward, giving tenants even more options at the upper end of the quality spectrum.
Tenant CS is a commercial tenant representation firm that provides tenant advisory services to businesses. We work across Australia, focusing on Canberra, Sydney, Melbourne, Brisbane, Perth and Adelaide.
We represent you, the tenant, and give you a competitive advantage when it comes to finding office space or negotiating a commercial lease.
Are you on the hunt for tenant representation services in Canberra?
Book a call with our team today to find out how we can help you!
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