Melbourne Fringe and Suburban Office Figures Q2 2025

Key Points:

• Leasing demand was mixed over H1 2025 with Southbank & St Kilda Road recording 6-month absorption of +249sqm and -18,313sqm respectively.  
• The office development pipeline remains empty for Southbank and St Kilda Road, with both precincts experiencing net withdrawals over the last 6-months. Most metro supply isn’t under construction, with forecasted supply over 2025 and 2026 c.70% below historical levels.
• Vacancy declined for all fringe and suburban precincts over the last 12-months, except for the City Fringe and St Kilda Road. Both markets have faced significant centralisation pressures, however we anticipate these pressures to be easing.  
• Face rents across the fringe saw strong growth in Q2 2025, with the City Fringe being a clear outperformer. Despite a significant uptick in vacancy, demand for select prime stock remains elevated as tenant preferences concentrate on a few select factors.
• Investment activity in Melbourne’s Fringe and Metro markets experienced another quarter of subdued performance in Q2 2025, with $50m in fringe and suburban assets transacting over the quarter. Yields have stabilised for the first time in three years, with expectations that Melbourne’s metro office market has reached peak pricing.