Premium office space drives sharp rental surge across Australia’s CBDs
Office rents in Sydney, Melbourne and Brisbane are climbing at their fastest pace since the pandemic as tenants compete for premium CBD space amid tightening supply.
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Australia’s major CBD office markets are recording some of their strongest rental growth since the pandemic, with businesses increasingly prioritising premium office space despite elevated geopolitical and economic uncertainty.
Knight Frank’s Australian Office Indicators Q1 2026 report found net effective rents in Sydney and Melbourne CBDs rose at their fastest annual pace since COVID-19, increasing 10.2 per cent and 6.8 per cent respectively over the 12 months to March.
Brisbane posted the strongest growth nationally, with net effective rents climbing 11.7 per cent over the same period.
The report points to a widening divide between prime CBD office towers and secondary office stock, as occupiers increasingly focus on quality, location and workplace amenity when making leasing decisions.
Knight Frank Senior Economist, Research & Consulting Alistair Read said demand remained heavily concentrated in premium assets within core CBD precincts, helping drive stronger rental growth in top-tier buildings.
“Occupier demand continues to be heavily concentrated in the most desirable CBD precincts and the highest-quality buildings, accelerating a sharp divergence between core and non-core markets,” Mr Read said.
According to the report, Sydney’s Core precinct and Melbourne’s Eastern Core significantly outperformed broader CBD markets over the past year.
“In Sydney’s Core precinct and Melbourne’s Eastern Core, net effective rents surged 14.3% and 16.1% over the past year, significantly outperforming the rest-of-CBD precincts,” Mr Read said.
The rental gap between prime and non-prime office locations has also continued to widen sharply.
“As a result, core CBD rents are now 54% higher than non-core locations in Sydney and 93% higher in Melbourne, highlighting the growing premium placed on amenity, accessibility and workplace quality,” he said.
Knight Frank said the strong rental growth across the major CBDs was being underpinned by a limited supply pipeline, with few new office developments expected to be delivered in the near term.
Mr Read said subdued construction activity was likely to support ongoing rental growth and tighter vacancy rates over the medium term, particularly for premium office towers.
“The combination of sustained demand and declining levels of new development will aid ongoing prime rental growth and lower vacancy rates over the medium term, particularly for best-in-class assets,” he said.
The report noted that current economic conditions were making new office developments increasingly difficult to justify financially.
“Economic rents remain well above expected market rents, making the construction of new office towers largely unviable, and concentrating tenant demand into existing buildings,” Mr Read said.
While suburban office markets generally remained subdued compared with CBDs, Melbourne’s Southbank precinct was identified as a relative outperformer, recording annual net effective rental growth of 2.7 per cent.
The report comes as broader Asia-Pacific office markets continue to stabilise following several years of disruption linked to hybrid work trends, inflation and rising interest rates.
Knight Frank’s separate Asia-Pacific Q1 2026 Office Highlights report found Sydney and Brisbane were among the strongest-performing office rental markets in the region, behind only Bengaluru and Tokyo for annual prime net face rental growth.
The Asia-Pacific report also found 18 of the 24 cities monitored across the region recorded stable or increasing rents in the first quarter of 2026, even as geopolitical uncertainty intensified following escalating conflict in the Middle East.
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A landmark beachfront home in Balgowlah Heights has sold for $17.5 million, setting a new residential record for the tightly held Northern Beaches suburb.
The six-bedroom residence at 30A Beatty Street changed hands on July 21 through Clarke & Humel Property, eclipsing its own previous benchmark by $5.7 million.
The property last sold for $11.8 million in October 2017, a result reported as a Balgowlah Heights record at the time. Its latest sale represents an increase of more than 48% in almost nine years and places it well ahead of other known sales in the suburb.
It is not the first time the address has reshaped local expectations. The home sold for $3.15 million in 2013 before extensive alterations and additions transformed it into the substantial trophy residence seen today. From that transaction to its latest sale, its recorded value has increased more than fivefold.
Occupying 1,074sqm in an exclusive no-through pocket, the property backs directly onto the golden sand of Forty Baskets Beach. A gate at the bottom of the garden opens to the beach and surrounding foreshore walks, creating the kind of direct harbour access rarely available on the Northern Beaches.
The home’s elevated, cascading design takes full advantage of its position. Walls of glass frame panoramic views across North Harbour, while a succession of indoor and outdoor living spaces follows the slope towards the water.
Arrival is suitably dramatic. The four-car garage—complete with harbour views—is connected to the residence by a lift. From there, a covered walkway leads through tropical gardens to an entrance framed by a koi pond, stone flooring and soaring ceilings.
At the centre of the home is an expansive living and entertaining level. A stone kitchen fitted with Miele appliances steps down towards the view, incorporating an integrated refrigerator and freezer and a built-in breakfast bar positioned to overlook the harbour.
The adjoining formal dining room opens through a bi-fold wall to a landscaped side courtyard. A substantial living room, anchored by a gas fireplace, also connects to the main terrace, creating a continuous relationship between the interior, gardens and water.
An electrically operated roof allows the terrace to be used in different weather conditions, while automated internal blinds and ducted airconditioning add to the home’s extensive technology and comfort features.
Outside, the entertaining areas continue around a swimming pool and spa. A built-in barbecue, steam room and generous terraces give the property the atmosphere of a private resort, with the beach only steps away.
The accommodation has been arranged to suit a large or multigenerational household.
Four bedroom suites occupy an upper level, while the main bedroom commands an entire floor. The private retreat includes sweeping harbour views, a large walk-in wardrobe and a luxurious ensuite.
On the lower level, a billiard room and bar are accompanied by two bedrooms and a bathroom. A separate self-contained studio provides further flexibility for extended family, guests or live-in staff.
The residence also includes a private home office, yoga room and extensive storage—features that allow it to function as both a secluded family home and a large-scale entertaining destination.
Sustainability and energy resilience have also been incorporated through solar panels and a Tesla battery.
Despite its rare waterfront setting, the property remains close to the conveniences of the lower Northern Beaches. Bus services are approximately 450 metres away, while Balgowlah Village, local schools and North Harbour Reserve are within easy reach. Manly is about three kilometres from the home.
The sale underlines the scarcity premium attached to Sydney homes combining substantial land, direct beach access and uninterrupted harbour views.
Balgowlah Heights has a median house value of about $4.23 million, according to PropTrack data displayed on realestate.com.au. At more than four times that figure, the Beatty Street result sits in a different tier from the suburb’s conventional prestige market.
Its price is also $6.65 million above the $10.85 million paid for neighbouring 30 Beatty Street in December 2025.
While conventional luxury features helped support the result, the defining asset is one that cannot be readily replicated: a private rear gate opening directly onto Forty Baskets Beach.
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