Melbourne Office Market Turns a Corner as Tenant Demand Strengthens and Future Supply Dries Up
Tenant enquiry has hit its strongest levels in years, just as Melbourne’s development pipeline begins to thin dramatically, according to Knight Frank’s latest research.
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Melbourne’s CBD office market is showing early signs of a turning point, with Knight Frank recording 83 tenant representation briefs in Q2 2026, following 81 in Q1; the strongest start to a year since 2022.
At the same time, after three office projects scheduled for completion by the end of 2026, no new office construction is currently anticipated.
Knight Frank Partner and Head of Research and Consulting, Victoria, Dr Tony McGough, said the market’s fundamentals are improving despite ongoing challenges on the investment side.
“What we’re seeing is a growing disconnect between current market sentiment and the medium-term supply outlook,” he said.
“Tenant demand has strengthened significantly, rents continue to rise and, once the current development pipeline is completed, there is very little new stock coming behind it.”
Melbourne CBD prime face rents have increased by 5.2% over the past year, McGough noted, despite vacancy rates hovering around 19% and expected to rise further through 2026.
He said the lack of future construction activity is setting up tighter market dynamics ahead, as demand continues to recover.
Prime net face rents rose to an average of $773 per square metre across the CBD, up 5.2% year-on-year and 0.8% over the quarter, while incentives edged up marginally in Q2 to average 48.1%.
Rental growth remains concentrated in the better locations and better buildings.
Knight Frank Partner and Joint Head of Office Leasing, Victoria, Simon Hale, said occupiers were becoming more active as business confidence improved.
“The leasing market has become noticeably busier over the first half of 2026,” he said.
“We’re seeing a growing number of occupiers testing the market and taking advantage of favourable leasing conditions, particularly for high-quality space in premium and A-grade buildings.”
Hale added that despite incentives remaining elevated, quality buildings continue to outperform, and tenants with major requirements are increasingly recognising the benefit of securing accommodation well ahead of their lease expiries.
Investment activity, however, remains subdued.
Only $286 million in Melbourne CBD office transactions have been recorded year-to-date, while prime yields softened by a further 13 basis points over the quarter to average 7.02%; their highest level since 2013.
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Australia’s fine wine authority is taking its trusted Classification global, ranking 160 international bottles from auction data to guide the country’s top collectors.
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Australia’s fine wine authority is taking its trusted Classification global, ranking 160 international bottles from auction data to guide the country’s top collectors.
Langtons has revealed it will launch its inaugural Classification of International Wine in 2026, extending the methodology behind its long-running Classification of Australian Wine, a benchmark for the local fine wine market since 1990, to bottles from beyond Australia’s shores.
“Australian wine palates are diverse and ever-expanding, with international wines holding an established presence in the collections of the country’s top wine drinkers,” says Tamara Grischy, General Manager at Langtons.
“The Langtons Classification of International Wine will be a vital resource for these collectors by highlighting the finest global wines that drive the Australian auction market.”
Set to be unveiled in early August, the Classification will feature 160 wines drawn from top wine regions in France, Italy, New Zealand, the US, Spain, Portugal and Germany. As with its Australian counterpart, the list isn’t based on opinion, wine show medals or critic scores; it’s built entirely from data.
“We look at every bottle of wine internationally that’s sent into Langtons and all its data. This includes aspects such as a wine’s previous bidding history; its clearance rate; and changes to its current value versus when the wine was bought,” said Michael Anderson, Head of Auctions at Langtons.
The dataset spans five years of secondary market auction activity across every international bottle traded through Langtons.
Anderson says the inaugural list will mix hard-to-find cult classics with established titans of the fine wine trade, and hints that some expected names may be notably absent from this first edition.
Scarcity, he explains, plays a significant role in the methodology: wines produced in tiny volumes rarely come up for sale, which limits the auction data available to include them.
“Just because a wine might not be on this first edition of the Classification of International Wine doesn’t mean it won’t be in the future,” he says.
The Classification will also create a new benchmarking opportunity for Australian wine. Anderson points to bottles such as Bass Phillip Reserve Pinot Noir and Henschke Hill of Grace — both First Classified wines in the Langtons Classification of Australian Wine — as capable of standing alongside the great names of Burgundy, Bordeaux and Tuscany.
“This Classification will be a trusted tool to compare wines to see how incredible the quality of our Australian wines are,” he says. “After all, Langtons was founded on the belief that the best Australian wines have a place at the world’s top tables.”
The Langtons Classifications draw their inspiration from the 1855 Bordeaux Classification, which ranked wines from first to fifth growth largely on selling history.
Unlike the Australian Classification, which includes both a Classified tier and a smaller First Classified tier, every wine in the new international list will sit under a single Classified category.
The most recent, 8th edition of the Langtons Classification of Australian Wine, released in late 2023, was widely described as a shake-up of the guide, with a large influx of cool-climate styles such as Tasmanian Pinot Noir and Yarra Valley Chardonnay reflecting growing Australian demand for lighter, more elegant wines.
The full Langtons Classification of International Wine will be unveiled in August via langtons.com.au.
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