CBRE

FIGURESIMELBOURNEFRINGE&SUBURBANOFFICE|Q32025

Supplyshortagelikelytoemergeasprojectcommencementsremainlimited

18.26%

PrimeSouthbankVacancy(+30bpsh-o-h)

4.4%

VictorianUnemploymentRate(August2025)

Note:Arrowsindicatechangefrompreviousquarter/year.

KeyPoints

-LeasingdemandwasmixedoverH12025withSouthbank&StKildaRoadrecording6-monthabsorptionof+249sqmand-18,313sqmrespectively.

-TheofficedevelopmentpipelineremainsemptyforSouthbankandStKildaRoad.We

currentlyforecastelevatedwithdrawalsacrossStKildaRoadovertheshortterm.MajorityofsuburbansupplyremainsinaDAApprovedstatuswithprojectdelayslikely.

-Vacancydeclinedforallfringeandsuburbanprecinctsoverthelast12-months,exceptfortheCityFringeandStKildaRoad.Bothmarketshavefacedsignificantcentralisation

pressures,howeverweanticipatethesepressurestobeeasing.

-FacerentsacrossthefringesawnormalisedfacerentgrowthinQ32025.Incentivesdeclinedacrossmostmetroprecincts,aslandlordsforselecthighqualityassetsbecomemore

aggressivegivencurrentsupplydynamicssettoemerge.

-InvestmentactivityinMelbourne'sFringeandMetromarketsexperiencedamoderateuptickinQ32025withjustover$100minfringeandsuburbanassetstransacting.Yieldshaveheldstableforthesecondconsecutivequarter,withexpectationsthatMelbourne'smetroofficemarkethasreachedpeakpricing.

10.5%

PrimeCityFringeNERGrowthy-0-y

PrimeCityFringeYieldChangey-0-y

38bps

StKildaRoad

Q32025

Q22025

Q32024

Vacancy

-

27.34%

-

NFR

$485/sqm

$472/sqm

$462/sqm

Incentives

50.0%

50.2%

49.8%

NER

$243/sqm

$235/sqm

$232/sqm

Yield

8.70%

8.70%

8.50%

FIGURE1:SummaryofPrimeMarketFundamentals

Southbank

Q32025

Q22025

Q32024

Vacancy

-

17.34%

-

NFR

$664/sqm

$661/sqm

$630/sqm

Incentives

46.7%

47.1%

45.2%

NER

$354/sqm

$350/sqm

$345/sqm

Yield

7.94%

7.94%

7.94%

Source:PCA,ABS.CBREResearch

1

CBRERESEARCH◎2025CBRE,INC.

FIGURESIMelbourneFringe&SuburbanOffice|3Q25

OfficeDemand

Demandacceleratesinselectfringeprecinctsascentralisationpressuresease.

Melbourne'sfringeprecinctscontinuetoexperiencemixedperformance.Overthelast6-

months,positivetotalabsorptionwasrecordedinSouthbankof+249qm.StKildaRoad

experiencednegativeabsorptiontotaling-18,313.Bothprecinctsexperiencedprime

outperformance,withSouthbank's+2,753sqmofprimeabsorptionthesecondstrongestresultfortheprecinctsincethepandemic.

ThedemandprofileacrossMelbourne'sCityFringeandInnerEasthasfollowedasimilar

dynamic.Overthelast12-months,weestimateapproximately12,000sqmofpositiveabsorptionoccurredintheInnerEast,offsetbyapproximately100,000sqmofnegativeabsorptionintheCityFringe.

Aspreviouslyreported,thecannibilisationeffectinMelbourne'sofficemarkethashada

significantimpactontheCityFringe,asaplethoraoflocaloccupiershavemademovesintoselectCBDassetswithelevatedincentives,oftenatalowereffectiverentthantheircurrent

premises.CBREResearchbelievestheimpactofthiscentralisationtobeeasing,asthetrade-offsassociatedwithacentralisationmovebecomemorepronouncedforthosewhohaven't

madeamove.Overtheshortterm,weexpectabsorptionlevelsintheCityFringetonormalise.

FIGURE2:Southbank6-monthNetAbsorption

25,000sqm

20,000sqm

15,000sqm10,000sqm

5,000sqmOsqm

-5,000sqm

-10,000sqm

-15,000sqm

H1H2

2013

H1H2

2014

H1H2

2015

H1H2

2016

H1H2

2017

H1H2

2018

H1H2

2019

H1H2

2020

H1H2

2021

H1H2

2022

H1H2

2023

H1H2

2024

H1

25'

-20,000sqm

■Prime■Secondary

Source:PCA,CBREResearch

FIGURE3:StKildaRoad6-monthNetAbsorption

20,000sqm

10,000sqm

Osqm

-10,000sqm

-20,000sqm

-30,000sqm

H1H2

2013

H1H2

2014

H1H2

2015

H1H2

2016

H1H2

2017

H1H2

2018

H1H2

2019

H1H2

2020

H1H2

2021

H1H2

2022

H1H2

2023

H1H2

2024

H

25'

-40,000sqm

■Prime■Secondary

Source:PCA.CBREResearch

2

CBRERESEARCH◎2025CBRE,INC.

FIGURESIMelbourneFringe&SuburbanOffice|3Q25

Supply

Multiplesupplycompletions.Projectslikelytobefurtherpushedoutto2028+

Melbourne'sfringeandsuburbanofficeprecinctsrecordedtwomajorcompletionsinQ32025,including189ToorakRoadand68-88GreenStreet,totaling19,700sqm.WeexpecttwomajorcompletionstooccurinQ42024,bringtheCY2025forcompletionsat45,000sqm.Current

forecastsindicateapproximately30,000sqmofsupplycompletionsinCY2026.

MajorityoffuturesupplyinMelbourne'smetroremainsinthedevelopmentapplication(DA)stage,forecastedfor2027orbeyond.ProgressionfromDAtoconstructioncontinuesataslowpace,andthistrendisexpectedtopersistoverthemediumterm,largelyduetoongoingfeasibilitychallengesconstrainingdevelopmentactivity.CBREResearchanticipates2027willalsobeasubduedyearforcompletions,withmostDA-stageprojectsunlikelytocommenceuntil2028orbeyond.

FIGURE4:HistoricalandFutureSupplybyYearandPrecinct

300,000

250,000

200,000

150,000

100,000

50,000

0

20202021202220232024202520262027+

■CityFringe■InnerEast■OuterEast■North&West

FIGURE5:UpcomingCityFringeandInnerEastDevelopmentsbyDevelopmentStageSource:CBREResearch

480SwanStreet

36WellingtonStreet

88LaurensStreet

88JolimontStreet

116RokebyStreet

6FitzgibbonStreet

10RiyerSreet

1MiddleRoad

8RedfernRoad

31-53remorne

Street

189ToorakRoad

68-88GreenStreet

196-206HighStreet

120CremorneSreet

120BalmainStreet

122MorayStreet

80CecilStreet

4ORokebyStreet

uobu!SILLL-66

Street

560ChurchStreet

475ChurchStreet

484-486SwanStreet

75-119CubittStreet

658ChurchStreet

555ChurchStreet

101CremorneStreet

500ChapelStreet

175BurnleyStreet

17CatoStreet

969BourkeRoad

40,000

30,000

20,000

10,000

0

CityFringeInnerEast

2027+

CityFringe

2026

CityFringe

2025

InnerEast

CityFringe

2024

ZPre-Commitment■Completed&Backfill■UnderConstruction■DevelopmentApplication

Source:CBREResearch

Note:Selectminorprojectswereexcludedfromextendedpipeline.

3

CBRERESEARCH◎2025CBRE,INC.

FIGURESIMelbourneFringe&SuburbanOficel3Q25

Vacancy

Bifurcationinvacancycontinuesastenantpreferencesremaincomplex.

VacancyratesinbothSouthbankandStKildaRoaddeclinedoverthelast6-months,with.declinesof-93bpsand-20bpsto16.68%and29.14%,respectively.Forbothprecincts,thedeclinesinvacancywereprimarilysupportedbynegativelevelsofnetsupply.Negativenetsupplytotalled-27,660sqminStKildaRoadoverthelast6-months,themosttheprecincthasrecordedinover20-years.AswithdrawalscontinuetotakeplacewithinStKildaRoad,weexpectthedemandandvacancyprofiletobecomemoreconcentratedinaselectfewhigh-qualityassets.

WithinMelbourne'sMetromarket,vacancydeclineswereobservedinMelbourne'sInnerEast&OuterEast,offsetbyasignificantriseinvacancyacrossMelbourne'sCityFringe.

Asignificantamountofofficesupplyhasenteredthemarketinthelast12-months

acrosstheCityFringe,approximately40,000sqmofthisremainingvacant,whichhascontributedtothisunderperformance.Withsupplypressureseasingsignificantly,vacancyislikelytonormaliseovertheshort-to-mediumterm.

FIGURE6:MelbourneMetroOfficeVacancy

30%

25%

20%

15%

10%

5%

0%

CityFringeInnerEastOuterEast

■H12025■H12024

Source:CBREResearch

FIGURE7:SouthbankOfficeMarketBalance

25,000sqm

20,000sqm15,000sqm

10,000sqm5,000sqm

-5,000sqm-10,000sqm

-15,000sqm

-20,000sqm

-25,000sqm

NetSupply6MonthNetAbsorption—TotalVacancy(RHS)

Source:PCA,CBREResearch

FIGURE8:StKildaRoadOfficeMarketBalance

35%

30%

25%

20%

15%10%

5%

0%

40,000sqm

30,000sqm

20,000sqm10,000sqm

Osqm-10,000sqm

-20,000sqm

-30,000sqm

-40,000sqm

un

Dec-22

心

人

O

0

r

Jun-17

Dec-21

凸

NetSupply6MonthNetAbsorption一—TotalVacancy(RHS)

Source:PCA,CBREResearch

4

CBRERESEARCH

◎2025CBRE,INC.

FIGURESIMelbourneFringe&SuburbanOffice|3Q25

5CBRERESEARCH◎2025CBRE,INC.

RentalPerformance

FacerentalgrowthslowsfollowingsurgeinH12025.

PrimefacerentsacrossMelbourne'sfringeandsuburbanofficemarketsrecordedmixedgrowthinQ32025.InMelbourne'ssuburbanprecincts,nofacerentalgrowthwasrecordedoverthequarter,withyear-on-yeargrowthratesstillelevatedinmostprecincts.Incontrast,primefacerental

growthwasmoderateinSouthbankandStKildaRoad,recording0.5%and2.9%respectively*.

SentimentremainsstrongforMelbourne'sfringeandsuburbantenants,aidedbytheslowingof

tenantcentralisationmovements.Despitenorentalgrowthobservedacrossmostofthemarket,weexpectfacerentalgrowthtoremainmoderateoverthemediumtermsupportedbyasupply

shortagesettomaterializefrom2027.

Incentivecompressioninmostprecinctsasqualityofficestockoutperforms.

Despitelittlefacerentalgrowthrecorded,Melbourne'sfringeandsuburbanprecinctsrecordedan

averageof-66bpsinincentivecompressioninQ32025.TheCityFringerecordedthemost

aggressivecompressionat-200bps,comparedto-40bpsand-20bpsinSouthbankandStKilda

Roadrespectively.Despitequarterlyincentivecompression,onayear-on-yearbasisincentives

havestillexpandedinthreeofMelbourne'ssevenmetroprecincts.

Notably,weattributeincentivecompressiontooutperformanceofaselectfewassets.Whilstvacancyratesareelevatedinselectprecinctsandsuburbs,metroofficemarketperformance

remainsbifurcatedheadingintoQ42025.Assetsthathavebeenabletodeliverquality,

speculativelyfit-outsincorelocationscontinuetooutperformwithstrongleasingactivity.We

expectthistrendtocontinuethroughout2026,drivingbifurcatedleasingandrentalperformance

acrossthemetromarket.

Note:CBREResearchadjustedit'sbasketofStKildaRoadassetswhichhas

FIGURE9:PrimeNetFaceRentGrowthfromBasePeriod(Q22022)byPrecinct.

30%

NetFaceRentMovement(%)

25%

20%

15%10%

5%

……

MelbourneSouthbankSouthEastOuterEastStKildaRoad

CBD

0%

-5%

InnerEastCityFringe

●Q32023●Q32024●Q32025

Source:CBREResearch

FIGURE10:PrimeIncentiveMovement(bps)fromBasePeriod(Q22022)byPrecinct

IncenteMovement(bps)

1,400

1,200

1,000

800

600

400

200

0…

CityFringeInnerEastSouthbankMelbourneOuterEastSouthEastStKildaRoad

CBD

●Q32023●Q32024○Q32025

positivelycontributedtorentalperformanceoverthequarter.Source:CBREResearch

FIGURESIMelbourneFringe&SuburbanOffice|3Q25

6CBRERESEARCH◎2025CBRE,INC.

InvestmentMarket

ModerateamountofinvestmentactivitywithlevelsontracktosurpassCY2024

SalesactivityacrossMelbourne'sfringeandsuburbanofficemarketssawamoderateuptickinQ32025,withtotalvolumesreachingapproximately$100millionfortransactionsabove$10million.TheselevelsaremoderatelylowerthanQ3activitylevelsseeninprioryears.

InvestorsentimentacrossMelbournehasremainedcautiousthroughoutthefirstthreequartersof2025,withnomajortransactionscompleted.However,wecontinuetonotetheexistenceofseveralhigh-profileassetsbeingbroughttomarketacrossthemetromarket.Whilenosignificantdeals

haveyetclosed,asurgeininvestmentvolumesisanticipatedinthecomingmonths,potentiallybringingactivityclosertohistoricalnorms.

Yieldsstabiliseacrossallprecinctsforthesecondconsecutivequarter.

YieldsacrossMelbourne'sfringeandsuburbanofficemarketshavestabilisedforthesecondconsecutivequarter,followingaperiodofsustainedexpansionthroughoutthecurrentcycle.Marketpricinghasreachedpeaklevels,reflectingtheculminationofupwardyieldmovementobservedinrecentyears.

AsofQ32025,primeyieldsacrossallprecinctsremainabove7%,withunderperformingmarketsreachingbetween8.0%and9.0%.Notably,keyassetsinbothoutperformingandunderperformingprecinctscontinuetodemonstrateresilientyieldbehaviour,underscoringthestrengt