Australia's office market is entering a period of structural change, with the conversation shifting from demand to supply as the pipeline of new office development continues to contract.
Cushman & Wakefield's latest national market update shows occupier confidence and leasing activity have improved across most capital cities during the first half of 2026, but businesses are taking longer to commit to major leasing decisions as tightening supply of quality space begins to reshape market dynamics.
Learn more from our national experts below:
NATIONAL
Josh McNamara, Cushman & Wakefield’s Head of Tenant Advisory Group Australia & New Zealand, said the conversation is beginning to shift from demand to supply.
"Occupier confidence has continued to improve through the first half of 2026, but decision-making remains more measured than in previous cycles as businesses take longer to commit to major leasing decisions amid ongoing economic uncertainty. At the same time, the more significant structural change is the limited volume of new office stock expected to come to market over the remainder of the decade.
"While headline vacancy rates remain elevated across several CBDs, they increasingly overstate the amount of genuinely competitive space available. Much of that vacancy is concentrated in older or lower-quality buildings, while availability within prime assets is becoming increasingly constrained.
“As a result, rents continue to grow across many markets, expansion rights and option terms to renew, providing security of tenure are becoming more valuable, and occupiers are finding there are fewer genuine alternatives than the headline vacancy figures suggest.
"That dynamic is reshaping leasing strategies for both landlords and occupiers. Higher construction costs continue to limit future development, placing greater emphasis on repositioning existing assets and extending the life of quality buildings.
“Demand for high-quality fitted, move-in-ready space remains strong as occupiers look to minimise capital expenditure and preserve flexibility, however pre-leasing activity remains relatively subdued as many businesses defer long-term commitments until there is greater economic certainty.
"For landlords, the focus is increasingly on securing longer lease terms and income certainty, while occupiers continue to seek flexibility, quality service and value. As supply tightens over the coming years, we expect businesses that delay decisions for too long may ultimately face fewer options in the locations and buildings they want. The most successful outcomes will increasingly come from landlords and occupiers working together, adopting a longer-term, mutual partnership approach, rather than viewing leasing purely as a transactional exercise."
Tim Stanway, Cushman & Wakefield’s National Director, Head of Office Leasing NSW said the first half of 2026 has been characterised by improving occupier confidence and stronger leasing momentum across the Sydney CBD market.
“Demand remained consistently ahead of 2025 levels, supported by an increase in larger occupier requirements, growing off-market activity and continued tenant movement into both the CBD and value-driven precincts within the market.
“While activity moderated following an exceptionally strong first quarter, underlying fundamentals remained resilient, with elevated inspection volumes, consistent transaction activity and a continued preference for fitted accommodation.
“Looking ahead, a significant volume of active requirements remains in the market, providing a solid pipeline of opportunity for landlords able to deliver quality space, flexibility and compelling value”.
VIC
Marc Mengoni, Cushman & Wakefield’s National Director Office Leasing Victoria said “Positively, leasing enquiry is up 19% on the same time last year, although active groups remain cautious as Victoria heads into a State election period.
“Despite vacancy still hovering around 19%, contiguous opportunities for larger organisations seeking 5,000 sqm and above are becoming scarce and this is bringing these groups including Jemena, QBE, WSP and others to market early to consider their long-term accommodation.
“Occupier focus remains on assets with improved amenity, ease of commute for staff and existing fit outs where possible. Wellness is also shaping as the next major building trend, with a number of major assets adding health and wellbeing amenity to attract and retain their next generation of customers”.
SA
Adam Hartley, Cushman & Wakefield’s Director & Head of Office Leasing SA said "Demand continues to be led by occupiers seeking high-quality fitted accommodation, particularly small and medium enterprises looking to minimise capital expenditure and accelerate their move into new premises. Larger occupiers remain active, although decision-making timeframes have lengthened as businesses take a more considered approach to long-term workplace requirements.
"The increase in vacancy expected during 2026 is largely the result of new buildings completing rather than weakening occupier demand. As these projects lease up, we expect the market to continue recording positive net absorption, with well-located, high-quality assets continuing to outperform older stock.
"Looking ahead, Adelaide remains well positioned. Once the current wave of new supply is absorbed, the future development pipeline becomes far more limited. That is expected to tighten conditions over the medium term, supporting rental growth and reinforcing the importance of quality accommodation as occupiers continue to place greater emphasis on workplace performance and flexibility."
WA
Roly Egerton-Warburton, Cushman & Wakefield’s Managing Director WA & Head of Office Leasing WA, said the latest data points to the early stages of a tightening market, although it does not yet fully reflect the strength of current leasing momentum.
"While vacancy has eased slightly, the headline figures still understate the level of activity we have been seeing on the ground. Over recent months, enquiry levels and leasing transactions have accelerated significantly across a broad range of occupier groups.
“Perth is experiencing strong demand across all grades of office stock, underpinned by a resilient resources sector and an increasingly constrained supply pipeline.
“Rising business confidence, combined with elevated construction costs and limited new development, has slowed the delivery of additional space to the market. As a result, supply is tightening at a time when occupier demand continues to strengthen, creating conditions we have not seen in more than a decade.
“The modest decline in vacancy is an early indicator of this shift. Large occupiers are already facing a shrinking pool of suitable options, while small and medium-sized businesses have notably fewer choices than they did a year ago. We expect this trend to continue, with market conditions progressively moving in favour of landlords throughout 2026."
QLD
Arianne Guehrer, Cushman & Wakefield’s Director, Head of QLD Tenant Advisory Group said
“Brisbane’s headline vacancy rate does not necessarily reflect the availability of space that meets the requirements of larger, quality-focused occupiers.
“The market may still appear to offer choice, but once tenants apply their requirements around building quality, location, amenity, sustainability and contiguous floor area, the genuine shortlist can become quite limited.”
“Occupier decision-making is generally taking longer due to increased internal scrutiny, capital constraints and more complex approval processes. The challenge is that the property market is not waiting for those decisions.
“Tenants with lease events over the next two to four years need to begin planning earlier, particularly where they require larger contiguous areas or premium-quality accommodation, otherwise they risk having to compromise on timing, quality or commercial terms.”
