The commercial property market in Melbourne’s CBD faces significant challenges but also holds strong potential for recovery and rejuvenation.

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High Vacancy, Growing Demand

As of early 2024, Melbourne’s CBD office vacancy hit 16.4% — the highest level since 1997 — driven by new supply and lowered tenant activity post-pandemic .
However, improving demand for A‑grade office space and a steady uptick in leasing activity offer positive signs.

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The Power of Mixed-Use Redevelopment

Adopting a strategic blend of residential, commercial, retail, and cultural spaces — as seen in Lower Manhattan and London’s Shoreditch — can breathe life back into the CBD .

• Examples:
  • Battery Park City, NYC: Turned underused land into vibrant mixed-use neighbourhoods including parks, housing, and commercial hubs.
  • Hammarby Sjöstad, Stockholm: Transformed an industrial harbour into a sustainable residential-commercial district.

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Why Mixed-Use Works

Economic Advantage

‍By integrating shopfronts, residential options, and offices, mixed-use developments increase foot traffic and local spending — boosting property values and tax revenue.

Urban Wellbeing & Sustainability

‍A multifunctional CBD reduces commutes, promotes public transport use, encourages walking, and supports urban greening, improving air quality and liveability .

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Enhancing Public Realm & Amenities

Projects like Anzac Station and Southbank Boulevard’s renewal are critical first steps. Melbourne could take inspiration from NYC’s High Line - an elevated rail line converted into a flourishing public park.

Urban greening strategies, like expanding tree canopy under Melbourne’s Urban Forest Strategy, also support livability goals.

Diversifying the Tenant Mix

Targeting a broad range of tenants — from creative startups to tech firms — can revitalise the office landscape.

• Case in Point: London’s Silicon Roundabout grew into a globe‑class innovation precinct through government incentives and private investment (Cottage & Castle).

Actionable Incentives

‍Tax breaks, grants, and shared workspaces can attract diverse businesses and fuel CBD vibrancy.

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Collaboration Is Key

Successful revitalisation requires integrated planning across government, developers, and communities.

• Hamburg’s HafenCity project is a standout example, combining public-private coordination and mixed-use planning to transform a port precinct.

Policy changes — like streamlined approvals, mixed-use incentives, and community engagement — will support Melbourne’s ongoing CBD evolution.

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