Office vacancy rates in Melbourne surge to 30-year high ahead of looming work-from-home legislation
The number of office buildings sitting empty in Melbourne has surged to a 30-year high ahead of Victoria's looming work-from-home legislation.
Office vacancy in the city jumped to 19.1 per cent in January this year, up from 17.9 per cent in July 2025 – the worst occupancy rate in Australia.
It also marks the highest rate of unused office buildings in Melbourne since 1997 and is a "concerning" milestone, the Property Council of Australia has warned.
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Office vacancy in Melbourne jumped to 19.1 per cent in January this year. Eamon Gallagher
"The property sector in Melbourne has been battling harsh economic headwinds and a succession of new and increased taxes for years," Property Council Victorian executive director Cath Evans said.
"Combine this with the uncertainty about the Victorian government's unprecedented and looming intervention to mandate the right to work from home, and it means too many investors are saying no to Melbourne."
The addition of 100,000sqm of new office space in the city has driven this increase.
Despite the historic rise in vacancy rates, Evans said there was a projection of "long-term faith" in prime office space in the CBD.
"Overall, Melbourne remains an attractive destination for employers, and the increase in supply presents a real opportunity for tenants who are able to capitalise on renewed interest in the market," she added.
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The looming work-from-home legislation could impact office vacancy rates further. Bloomberg
Nationally, vacancy rates rose to 15.9 per cent, up from 15.2 per cent.
Last year, the national vacancy rate hit its highest rate since 1995, when the country was still recovering from the property market crash of the 1990s.
Pending legislation will allow millions of Victorians to work from home for at least two days a week.
Premier Jacinta Allan said she would introduce legislation in 2026 to allow both public and private sector workers who can reasonably do their job at home to be legally allowed to do so.
The Business Council of Australia previously warned the plan would risk jobs and stifle investment in the state.
"The proposal for a one-size-fits-all mandate will drive investment and jobs away from the state at a time they're needed most," chief executive Bran Black said.
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