CBRE

FIGURESIMELBOURNECBDOFFICE|Q32025

Surgeininvestmentactivityasconfidence

returnsinMelbourne'sofficemarketrecovery

756AUD/sqm

NetFaceRent(+1.0%q-0-q)

49.0%

PrimeIncentives(+10bpsq-0-q)

17.92%

CBDOfficeH12025Vacancy(-4bpsh-o-h)

7.08%

PrimeYield(+1bpsq-0-q)

Note:Arrowsindicatechangefrompreviousquarter/halflyear.

FIGURE1:MelbourneCBDOffice|SummaryofPrimeMarketIndicators

MelbourneCBD

3Q25

2Q25

3Q24

Q-o-QChange

Y-o-YChange

GFR

AUD982

AUD974

AUD945

+0.9%

+3.9%

NFR

AUD756

AUD749

AUD728

+1.0%

+3.9%

Incentives

49.0%

48.9%

47.6%

+10bps

+137bps

NER

AUD387

AUD384

AUD383

+0.8%

+1.1%

Yield

7.08%

7.07%

6.53%

+1bps

+28bps

KeyPoints

-NetabsorptioninMelbourne'sCBDturnedpositiveforthefirsttimesince2022,with1,446sqmofdemandrecordedoverthepastsixmonths.Activitywasstrongestincoreprecincts,aligningwithprevailinglocalsentimentobservedinrecentyears.

-Themajorofficecompletionof85SpringStreetwasrecordedinQ32025.Forecastedannual

supplyhasbeenfurtherdeferred,withonly25,000sqmofnewstockexpectedbetween2027and2030,representingahistoriclowfortheMelbournemarket.

-TheoverallvacancyrateintheMelbourneCBDendedH12025at17.94%,reflectingamodest

declineof4basispointsovertheperiod.Whilevacancypressureshavestabilised,asubstantialvolumeofincomingsupplyoverthenext12monthssuggeststhisstabilisationmaybetemporary.

-Primenetfacerentsincreasedby1.0%overQ32025.Primeeffectiverentsexperiencedsimilargrowth,supportedbystabilisingincentivesacrossmostprecincts.

-Investmentactivitytotalledc.$670m,withyear-to-dateactivitytotallingover$1billionAUD.

Source:CBREResearch

1CBRERESEARCH◎2025CBRE,INC.

2

FIGURESIMelbourneCBDOffice|3Q25

TheBigPicture

Melbourneonpacetorecordhighestvolumeofenquiryin10-yearswhilst

availabilityconditionsworsenformosttenants

Overthefirstthreequartersof2025,Melbourne'sCBDhasrecordedjustover320,000sqmof

enquiry,withQ3representingthethirdstrongestquarterofenquiryvolumesince2019.BasedonhistoricalQ4enquirylevels,Melbourneislikelytoreachapproximately400,000sqmoftotal

enquiryforCY2025,representingthehighestvolumeofenquiryinover10-years.

Whilstthisissignificant,theimportanceisonlyexaggeratedonceoverlayingitwithcurrent

availabilitydynamics.Specifically,primeavailabilityacrosstheCBDcontinuestodecline,

especiallyformedium-to-largesizedtenantswheretheQ3availabilityrateislessthan4%

(excludingDocklands).Availabilityforhigh-riseprimeofficespaceissignificantlymorescarce,withanavailabilityrateofapproximately2%for1,000sqmtenantslookingoutsideofDocklands.

Rentalgrowthsettoaccelerateincoreprecinctsandhigh-riseavailabilities

Thecombinationofelevatedtenantenquirycoupledwithavailabilitydynamics,islikelytocreateaperfectstorm'forrentalgrowthtoaccelerateincoreprecinctsandbuildingsthatcanleverage

existingorupcominghigh-riseavailabilities.

Whilstmuchofthecurrentenquiryinthemarkethavingapreferredcommencementdatemultipleyearsinthefuture,itisimportanttonotethatcurrentconditionscoincidewithasupplyshocksettoemergefrom2027onwards.Withnomajordevelopmentscurrentlyforecastedfrom2027until

enofthedecade,thereisno'releasavahva'tha+illallshortterm.

Itispossiblethatdevelopmentactivitypicksupoverthenext24-months,particularlyifvacancypressuresstarttomaterialiseacrossthebroadermarket.However,giventhescopeandscaleof

houww__

,ILIlCurrentCBREResearchprojectonsfrecastigtentm

developmentsreachingcompletionby2031andbeyond.

CBRERESEARCH

FIGURE2:MelbourneCBDPrimeOfficeAvailabilitybyTenantRequirement

20%

16%

12%

8%

4%

0%

3,000sqm8,000sqm

1000sgm

PCAPrimeVacancy

Contiouous&HighriseSpace

3,000sqm&Level>20

■ExcludingDocklands-IncludingDocklandsOfficeEnquiryVolumeandCountbyYear

Source:CBREResearch

FIGURE3:MelbourneCBD

400,000sqm

300

250

200

150

100

50

0

300,000sqm

200,000sgm

100,000sqm

Osqm

20202021

■VolumeofEnquiries

2019

202220232024

25'

●NumberofEnquiries(RHS)

SourceCBREResearch

◎2025CBRE,INC

FIGURESIMelbourneCBDOffice|3Q25

3CBRERESEARCH◎2025CBRE,INC.

OfficeDemand

Netabsorptionturnspositiveforthefirsttimeinthreeyears

MelbourneCBDhasrecordeditsfirstperiodofoverallpositivenetabsorptionsinceH12022.AsofH12025,trailingsix-monthnetabsorptiontotalled+1,446sqm,anotableimprovementfromthe

-44,962sqmrecordedinH22024.Aspreviouslyreported,thesignificantnegativeabsorptioninH22024wasprimarilydrivenbyAustraliaPost'srelocationoutoftheCBD.

PremiumandGradeBassetsrecordedpositivenetabsorptionof+4,520sqmand+15,031sqm,

respectively.Thestrongperformanceofpremiumstockreinforcestheongoingflight-to-qualitytrend,particularlyamidtighteningvacancyinpremiumhigh-riseassetslocatedincoreprecincts.

GradeBoutperformanceisattributedtothecentralisationoffringeandsuburbantenantsintotheCBD,capitalisingontenant-favourableleasingconditions.Whilethistrendhasbeenevidentoverthepastsixmonths,weanticipateashort-termtaperingofcentralisationactivity.

Coreprecinctsoutperformastenantsmovetosecurespace

Onaprecinctlevel,H12025experiencedmixedresultsconsistentwithlocalsentimentinrecentmonths;coreoutperformanceoffsetbyaweaknon-coremarket.

Melbourne'sEasternCoreandWesternCoreprecinctsledthemarket,recording+9,865sqmand+7,612sqmofnetabsorption,respectively.Whiletheseprecinctshaveexperiencedvariable

performanceoverthepast12months,themajorityofleasingactivitycontinuestobeconcentratedwithinthem,reinforcingtheirrelativeresilience.

Conversely,DocklandsandtheNorthEasternprecinctrecordedmoderatenegativeabsorption.Althoughtheseareashavepreviouslybenefitedfromelevatedincentivesandtenant

centralisation,theimpactofthesedriversappearstobewaning.Weexpectthistrendtopersistoverthecomingyears

FIGURE4:MelbourneCBDOffice|6-MonthNetAbsorption,byBuildingGrade150,000sqm

100,000sqm

50,000sqm

Osqm-50,000sqm

-100,000sqm

H1H2

2015

H1H2

2016

H1H2

2017

H1H2

2018

H1H2

2019

H1H2

2020

H1H2

2021

H1H2

2022

H1H2

2023

H1H2

2024

H1

25'

-150,000sqm

■Prime■Secondary

Source:PCA,CBREResearch

BuildingGrade

PremiumGradeAGradeB

GradeC

GradeD

Precinct

CivicDocklands

EasternCoreFlagstaff

NorthEasternSpencer

WesternCore

-14,453

15,031

-12,

FIGURE5:MelbourneCBDOffice|6-MonthNetAbsorption(sqm),byBuildingGrade&Precinct,H12025

4,520

-

-3,70

5

53

9,865

6,816

333

-3,50

7

384

6,

241

7,612

-20,000-15,000-10,000-5,00005,00010,00015,00020,000Source:PCA,CBREResearch

FIGURESIMelbourneCBDOffice|3Q25

Supply

Fouryearsofnomajordevelopmentslikelyascertaintyrisesonfuturesupplypipeline

Melbournehasseenthemajorcompletionof85SpringStreet'srefurbishmentduringQ32025,markingthefirstmajorcompletionof2025.Overthequarter,wehavepushedbackourexpecteddeliverytimingfor7SpencerStreetandTownHallPlace.Inturn,weforecastaconcentratednumberofdeliveriestooccurin2026,markingthelastmajorwaveofforecastedsupplyinMelbourne'sofficemarketuntilthenextdecade.

Withtheconstrainedsupplyoutlooklikelytoemergefrom2027onwards,wecontinuetoforseesignificanttailwindsforexistingassetsincoreassetsacrossMelbourne,supportingreductionsinvacancy,risingrentalgrowthandfallingincentives.

Whilesomeprojectscurrentlyscheduledforpost-2030deliverycouldbebroughtforward,thisis

consideredunlikelyundercurrentmarketconditions,asongoingfeasibilitychallengescontinuetoweighondevelopmentactivity.

FIGURE7:MelbourneCBDOffice|Historical&ForecastSupply

FIGURE6:MelbourneCBDOffice|UpcomingMajorDevelopmentProjects

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

20182019202020212022202320242025202620272028202920302031+

UnderConstruction

一5-YearHistoricalAverage

Complete

Mooted

DAApproved/Applied

Source:CBREResearch

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

Melbourne555Collins500111Bourke299Bourke1785Spring435Bourke7Spencer51FlindersTownHall26-30600Collins60CollinsT2555388WilliamGoodShedGoodShed572-57490Collins

QuarterStBourkeStStStBennettsStStStPlacelFlindersStStStCollinsStStSouthNorthLonsdaleSt

TowerLnSt

Existing/Backfll2025202620272028202920302031+

2Pre-commitment/Leased■Completed/Backfill■UnderConstruction■DAApproved/Applied■Mooted

Source:CBREResearch

Note:CBREResearch'sassessmentofmootedprojectsissubjectiveandshouldn'tbetakenasfact.

4CBRERESEARCH◎2025CBRE,INC.

FIGURESIMelbourneCBDOffice|3Q25

5CBRERESEARCH◎2025CBRE,INC.

Vacancy

Vacancystabilisationcontinuesamidloomingsupplypressures

MelbourneCBD'soverallvacancyratedeclinedmarginallyby4bpsto17.92%inH12025,

markingthesecondconsecutivequarterofstabilisation.However,thistrendisexpectedtobeshort-lived,withasignificantvolumeofuncommittedstockanticipatedtoenterthemarketoverthenext12months.

VacancydeclinedacrossallassetgradesinH12025,withtheexceptionofGradeAofficespace,whichrecordedamodestincreaseof71bpsto19.3%.PremiumandGradeBassetsexperiencedmoderatedeclinesof37bpsand146bps,respectively,bringingvacancyratesto16.4%and

18.9%.

Prime-gradevacancyroseby36bpsoverthepastsixmonths,largelydrivenby

underperformanceinselectnon-coreprecincts.Despitethis,thebroadermarketcontinuestoreflectaflight-to-qualitytrend.RecentCBREResearchdatahighlightsatighteningvacancy

environmentforcontiguoushigh-risespacesincorelocations.Asavailabilityinthesesegmentsbecomesincreasinglyconstrained,leasingactivityisexpectedtoaccelerateintheneartermastenantsmovetosecurelimitedprimeoptions.

Subleasevacancyfirmlyathealthylevels.

CBREResearch'ssubleasevacancydatasuggestssubleasevacancyratesacrossmost

Melbourneprecinctsarenowbelow2%.TheNorthEasternprecinctcontinuesremainsthehighestinMelbourne,howeversubleaselevelsarehalvedcomparedtotwelvemonthsprior.

Overthelast12-months,thecombinationofstrongleasingactivityinsubleasespace,combinedwithwithdrawalsofsubleasespacehavecontributedtodecliningvolumes.Weexpectsubleasevacancytoremainathealthylevels,withnomajorupcomingsubleasevacancieslikelytoenterthemarketintheshortterm.

FIGURE8:MelbourneCBDOffice|MarketBalance

Jun-13

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-7

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

un-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

200,000sqm

150,000sqm

100,000sqm

50,000sqm

Osqm

-50,000sqm

-100,000sqm

-150,000sqm

NetSupply6MonthNetAbsorptionTotalVacancy(RHS)

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

F

Source:PCA,CBREResearch

FIGURE9:MelbourneCBDOffice|SubleaseVacancyRatebyPrecinct

7%

6%●Jun-255%●Jun-24

4%

3%

2%

1%

0%

NorthEasternWesternCoreDocklandsEasternCoreSpencerCivic

Source:CBREResearch

FIGURESIMelbourneCBDOffice|3Q25

6CBRERESEARCH◎2025CBRE,INC.

RentalPerformance

Facerentalgrowthreturnstonormalisedlevels,positiveinmajorityofprecincts

FollowingelevatedfacerentalgrowthexperiencedinselectofficeprecinctsinQ22025,Q3hasrepresentedamoremeasuredquarterforgrowthacrossMelbourne.TwoofMelbourne'scoreprecincts(EasternCoreandCivic)recordedelevatedquarter-on-quartergrowthof1.8%and

1.6%.Incomparison,threeofMelbourne'ssevenprecinctsrecordedstabilityinfacerentsoverthequarter.

Webelieveyear-on-yeargrowthratesaremoreindicativeofthetruestateofMelbourne'sofficemarket.DespiteaverageprimeCBDfacerentsgrowingby4.0%year-on-year,threeof

Melbourne'sprecinctshaverecordedelevatedgrowthinthehigh-singledigits,offsetbylowtonegativegrowthinselectprecincts.Thisbifurcationisexpectedtocontinueoverthemediumterm,withcurrentforecastshighlightingselectprecinctoutperformancedrivenbyleasing

demanddifferentials.

EffectiverentalgrowthstableorgrowingacrossallCBDprecinctsforfirstquartersince2022

PrimeeffectiverentsincreasedonbothaquarterlyandannualbasisinQ32025,risingby0.7%quarter-on-quarterand1.1%year-on-year.Notably,allofMelbourne'ssevenprecincts

contributedtothequarterlyperformance,withQ32025representingthefirstquartersince2022inwhichallprecinctsrecordedstableorgrowingeffectiverents.

Thestabilisationofincentivesremainsthekeydriverofthisrecovery.Whilesomeoutlier

precinctspersist,themajorityofMelbournehasnowexperiencedconsecutivequartersof

incentivestability.Thistrendisexpectedtocontinuethroughtheremainderof2025andinto2026,withlimitedfurtherexpansioninincentivesanticipatedduringthiscycle.

Wecontinuetoforecastbifurcatedincentivecompressionover2026.Withthecurrentprimeavailabilityratedynamics,coupledwithenquiryvolumes(see'TheBigPicture'),weforeseeanofficemarketinwhichincentivecompressioncouldbeginatanaggressiveratedependingonlandlordconfidenceinnegotiations.

FIGURE10:MelbourneCBDOffice|PrimeRentalIndicators,byPrecinct

MelbourneCBD

Precinct

Prime

NFR(AUD/sqm)

Prime

NER(AUD/sqm)

Prime

Incentives(%)

3Q25

Q-o-QChange

Y-0-YChange

3Q25

Q-0-QChange

Y-0-YChange

3Q25

Q-0-QChange

Y-o-YChange

Civic

754

1.6%

6.7%

398

1.6%

6.2%

47.2%

Stable

29bps

Docklands

539

0.5%

-3.0%

192

0.5%

-13.5%

64.3%

Stable

433bps

EasternCore

957

1.8%

8.8%

585

1.1%

8.4%

39.0%

38bps

25bps

Flagstaff

579

Stable

1.1%

289

Stable

1.1%

50.0%

Stable

Stable

NorthEastern

633

1.2%

2.2%

290

1.2%

2.2%

54.2%

Stable

Stable

Spencer

720

Stable

5.9%

324

Stable

0.3%

55.0%

Stable

250bps

WesternCore

756

Stable

-1.0%

390

Stable

-5.7%

48.5%

Stable

263bps

Source:CBREResearch

FIGURE11:MelbourneCBDOffice|PrimeNetEffectiveRentGrowthRatesbyPrecinct

10%

5%

0%

-5%

-10%

-15%

EasternCoreCivicNorthEasternFlagstaffSpencerWesternCoreDocklands

●NetEffectiveRentGrowthQ-0-Q●NetEffectiveRentGrowthY-o-Y

Source:CBREResearch

FIGURESIMelbourneCBDOffice|3Q25

InvestmentMarket

InvestmentactivitysurgesinQ3asforeigninvestorconfidencecontinuestorise

Melbourne'sCBDinQ32025recordedit'sstrongestquarterofinvestmentactivityinoverthree

years,withapproximately$670milliontransactedacrossfourassets.Threemajortransactionstookplaceoverthequarter,including357CollinsStreet(c.$195m),FlindersGate(c.$254m)and750CollinsStreet(c.$390m).Notably,thetwolargesttransactionsinvolvedforeignbuyers,signalingconfidence

aroundtheoutlookforMelbourne'sofficemarket.

WecontinuetonotemultiplemajorofficeassetsarecurrentlyonthemarketheadingintoQ42025,including31QueenStreetand470CollinsStreet,whicharelikelytofurtherboostinvestmentactivity

oncesettled.

Yieldscontinuetoholdmostlystablewithrecentevidencesupportingcurrentvalues

PrimeCBDyieldsincreasedmarginallyby1basispointto7.08%inQ32025,markingthesecondconsecutivequarterofyieldstabilisation.Recentmajortransactionevidencehassupportedourcurrentyieldbenchmarksinmostprecincts,andwecontinuetoexpectmostlystableyieldsinQ42025.Yieldcompressionbenchmarkshaveyettobeachieved,howeverwithrenewedactivity,

particularlyamongforeigninvestors,thisislikelytooccuroverCY2026.

FIGURE12:MelbourneCBDOffice|SalesActivity1

SalesVolume(SAUDm)

NumberofTransactions

$4,000m

$3,000m

$2,000m

$1,000m

$Om

20152016201720182019

SalesVolume

2020202120222023

NumberofDeals(RHS)

30

25

20

15

10

5

0

202425'

Source:CBREResearch

Includessalesabove>S20mAUD.

FIGURE13:MelbourneCBDOffice|CurrentPrimeYieldandPrimeYieldChangebyPrecinct

urrentYield(%)

BPSMovement

Eastern

■CurrentPrimeYield●Q-o-Q(RHS)●Y-o-Y(RHS)

Source:CBREResearch

FIGURE14:MelbourneCBDPrimeOfficeIndicativeYieldsvsCommonwealthGovernment10-yrBondYields

8%

7%

6%

5%

4%

3%

2%

1%

Q1Q2Q3Q42018

Q1Q2Q3Q4

2019

Q1Q2Q3Q4

2020

Q1Q2Q3Q42021

Q1Q2Q3Q4

2022

Q1Q2Q3Q4

2023

Q1Q2Q3Q4

2024

Q1Q2Q325'

0%

PrimeYieldSpread一PrimeYields一10YearGovernmentBondYield

Source:RBA,CBREResearch

7CBRERESEARCH◎2025CBRE,INC.

FIGURESIMelbourneCBDOffice|3Q25

FIGURE15:MelbourneCBDOffice|TotalVacancyRatebyPr