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Following a year of challenging conditions through 2023, Australia’s major capital city office markets are expected to face a year of two halves in 2024. While economic and office market headwinds will continue into 2024, the outlook for the second half of 2024 is likely to improve.

Australia’s major capital city office markets are expected to continue to experience The Great Office Upgrade through 2024, with tenant relocation and upgrading a prominent leasing market theme. While remaining historically elevated, Australian CBD office rental affordability conditions are likely to decline in 2024.

Australia’s major capital city office markets have reported increased physical occupancy rates in 2023. Office occupancy is expected to continue to approach equilibrium in 2024, strengthening tenant workspace requirements and leasing demand growth in 2024 and beyond.

Development and construction market pressures are likely to remain a factor for some time yet. Pre-commitment to office development projects will remain a significant factor in shaping Australia’s new office supply outlook.

Multiple headwinds impacting Australian office capital market activity are expected to remain in play through 2024. However, several factors are expected to re-ignite cross-border capital flow and capital growth across Australia’s prime CBD office markets through the second half of 2024 and into 2025.