According to the PCA, Adelaide CBD’s overall vacancy rate declined from 17.5% in July 2024 to 16.4% in January 2025. Over the six-month period, 1.5% of space was absorbed by tenant demand and 0.2% in withdrawals offset the impact of 0.6% additional office supply. The A-Grade market led the improvement, with vacancy falling from 22.0% to 18.1%, while B-Grade saw a more modest drop from 16.9% to 14.9%.
2024 saw subdued supply, with just 6,811 sqm of net space added for the year, below Adelaide’s historical average. This was primarily driven by the refurbishment of 150 Grenfell St, which added 9,485 sqm, but this was offset by stock withdrawals at 139 Frome St and 61 Carrington St, totalling 8,826 sqm.
Looking ahead, a handful of major developments are set to shape the future supply pipeline, with two currently under construction. These include:
Adelaide’s net effective rents held steady over the quarter but have shown modest growth compared to the first half of the year. Prime face rents increased to $522, while secondary face rents remained unchanged at $335. Prime effective rents rose 3.9%, reaching $317, up from $305 in H1. Secondary effective rents also edged higher, rising to $199, up from $195. Incentives were unchanged over the period, holding at 37.5% for Prime and 41.5% for Secondary.
Adelaide’s sublease volume has increased over the latter half of the year by 3,100 sqm ending the year at 0.9%. The city's relatively low subleasing rate is due to several factors, including:
Some of the recent notable commitments shaping Adelaide’s CBD market include:
Adelaide's office market is undergoing a significant transformation, driven by a pronounced "flight to quality" trend. In the first half of 2024, the city recorded a net absorption of 29,041 sqm the highest six-monthly figure in over 15 years indicating robust demand for premium office spaces. In H2 of 2024, net absorption was also positive at 22,606 sqm, of which Prime drove 22,102 sqm. This shift is further evidenced by the declining vacancy rate in Adelaide’s A-Grade buildings.
Tenants are increasingly prioritising buildings with superior amenities and sustainable features. Green Star-certified buildings, for instance, have demonstrated tangible benefits, including a 16.4% higher capital value per sqm and a 13.5% higher annual return compared to non-certified counterparts. This preference underscores the growing importance of environmental responsibility and employee well-being in corporate real estate decisions.
As businesses continue to seek high-quality, sustainable office environments to attract and retain talent, the demand for premium spaces is expected to remain strong. Conversely, secondary-grade buildings may face challenges in backfilling vacancies, highlighting the need for strategic upgrades or repositioning to meet evolving tenant expectations.
Adelaide's commercial office market has experienced notable price adjustments over the past year, particularly in secondary-grade assets. In 2024, transaction volumes declined by 36%, totalling $209 million, reflecting subdued investment activity. This downturn is attributed to a mismatch between buyer and vendor pricing expectations, leading to a cautious approach from investors.
Capital values for office properties have also seen significant declines. In the first quarter of 2024, capital growth for office properties was reported at -12.7%, down from -9.0% in the previous half-year. This trend indicates a continuing downward pressure on office property values, influenced by factors such as the shift to remote work and rising capitalisation rates.
Despite these challenges, there is a growing trend of owner-occupiers entering the market. In 2024, vacant possession sales accounted for 65% of all commercial property deals in South Australia, up from 53.5% the previous year. In Adelaide's CBD, such sales represented 72% of transactions, indicating a shift towards businesses purchasing premises for their own use.
Declining capital values and subdued investor demand could lead to more flexible lease terms, incentives, or even discounted rents to secure great tenants, particularly in secondary-grade assets. At the same time, the rise in owner-occupier activity may reduce leasing options over time, especially in the CBD, as more buildings are taken off the rental market.
Looking ahead, the market may see a rebound as economic indicators improve and interest rates stabilise, potentially encouraging more investment activity. However, the pace of recovery will largely depend on broader economic conditions and investor confidence. Tenants should keep a close eye on market movements and consider locking in favourable terms while conditions remain tenant friendly.
Adelaide’s CBD office market is showing robust signs of recovery, with strong tenant demand driving net absorption that sits well above historical averages. In the second half of 2024, net absorption reached 22,606 sqm. This follows a record-breaking 29,041 sqm in the first half of 2024 and significantly outpaces Adelaide’s 10-year average of around 5,000 sqm.
Demand is primarily concentrated in Prime (A-grade) assets, which accounted for 98% of total net absorption in H2 2024 (22,102 sqm), while secondary-grade buildings lagged with just 504 sqm of net absorption. This further reflects the ongoing "flight to quality" trend, where tenants seek modern, sustainable office spaces to support flexible working and talent attraction.
By industry, the bulk of demand in H2 came from the Professional, Scientific and Technical Services sector (24%), followed by Healthcare and Social Assistance (13%) and Public Administration and Safety (7%).
Tenant CS is a commercial tenant advisory service that offers tenant representation services in Adelaide. We also cater for businesses across Australia, in cities such as Sydney, Melbourne, Perth, Brisbane and Canberra, but also in regional areas.
We represent you, the tenant, and our in-depth knowledge of the Australian leasing market gives our clients the competitive advantage when it comes to finding a space or negotiating a commercial lease.
So, if you’re on the hunt for tenant representation in Adelaide, book a call with our team today!
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According to the PCA, Adelaide CBD’s overall vacancy rate declined from 17.5% in July 2024 to 16.4% in January 2025. Over the six-month period, 1.5% of space was absorbed by tenant demand and 0.2% in withdrawals offset the impact of 0.6% additional office supply. The A-Grade market led the improvement, with vacancy falling from 22.0% to 18.1%, while B-Grade saw a more modest drop from 16.9% to 14.9%.
2024 saw subdued supply, with just 6,811 sqm of net space added for the year, below Adelaide’s historical average. This was primarily driven by the refurbishment of 150 Grenfell St, which added 9,485 sqm, but this was offset by stock withdrawals at 139 Frome St and 61 Carrington St, totalling 8,826 sqm.
Looking ahead, a handful of major developments are set to shape the future supply pipeline, with two currently under construction. These include:
Adelaide’s net effective rents held steady over the quarter but have shown modest growth compared to the first half of the year. Prime face rents increased to $522, while secondary face rents remained unchanged at $335. Prime effective rents rose 3.9%, reaching $317, up from $305 in H1. Secondary effective rents also edged higher, rising to $199, up from $195. Incentives were unchanged over the period, holding at 37.5% for Prime and 41.5% for Secondary.
Adelaide’s sublease volume has increased over the latter half of the year by 3,100 sqm ending the year at 0.9%. The city's relatively low subleasing rate is due to several factors, including:
Some of the recent notable commitments shaping Adelaide’s CBD market include:
Adelaide's office market is undergoing a significant transformation, driven by a pronounced "flight to quality" trend. In the first half of 2024, the city recorded a net absorption of 29,041 sqm the highest six-monthly figure in over 15 years indicating robust demand for premium office spaces. In H2 of 2024, net absorption was also positive at 22,606 sqm, of which Prime drove 22,102 sqm. This shift is further evidenced by the declining vacancy rate in Adelaide’s A-Grade buildings.
Tenants are increasingly prioritising buildings with superior amenities and sustainable features. Green Star-certified buildings, for instance, have demonstrated tangible benefits, including a 16.4% higher capital value per sqm and a 13.5% higher annual return compared to non-certified counterparts. This preference underscores the growing importance of environmental responsibility and employee well-being in corporate real estate decisions.
As businesses continue to seek high-quality, sustainable office environments to attract and retain talent, the demand for premium spaces is expected to remain strong. Conversely, secondary-grade buildings may face challenges in backfilling vacancies, highlighting the need for strategic upgrades or repositioning to meet evolving tenant expectations.
Adelaide's commercial office market has experienced notable price adjustments over the past year, particularly in secondary-grade assets. In 2024, transaction volumes declined by 36%, totalling $209 million, reflecting subdued investment activity. This downturn is attributed to a mismatch between buyer and vendor pricing expectations, leading to a cautious approach from investors.
Capital values for office properties have also seen significant declines. In the first quarter of 2024, capital growth for office properties was reported at -12.7%, down from -9.0% in the previous half-year. This trend indicates a continuing downward pressure on office property values, influenced by factors such as the shift to remote work and rising capitalisation rates.
Despite these challenges, there is a growing trend of owner-occupiers entering the market. In 2024, vacant possession sales accounted for 65% of all commercial property deals in South Australia, up from 53.5% the previous year. In Adelaide's CBD, such sales represented 72% of transactions, indicating a shift towards businesses purchasing premises for their own use.
Declining capital values and subdued investor demand could lead to more flexible lease terms, incentives, or even discounted rents to secure great tenants, particularly in secondary-grade assets. At the same time, the rise in owner-occupier activity may reduce leasing options over time, especially in the CBD, as more buildings are taken off the rental market.
Looking ahead, the market may see a rebound as economic indicators improve and interest rates stabilise, potentially encouraging more investment activity. However, the pace of recovery will largely depend on broader economic conditions and investor confidence. Tenants should keep a close eye on market movements and consider locking in favourable terms while conditions remain tenant friendly.
Adelaide’s CBD office market is showing robust signs of recovery, with strong tenant demand driving net absorption that sits well above historical averages. In the second half of 2024, net absorption reached 22,606 sqm. This follows a record-breaking 29,041 sqm in the first half of 2024 and significantly outpaces Adelaide’s 10-year average of around 5,000 sqm.
Demand is primarily concentrated in Prime (A-grade) assets, which accounted for 98% of total net absorption in H2 2024 (22,102 sqm), while secondary-grade buildings lagged with just 504 sqm of net absorption. This further reflects the ongoing "flight to quality" trend, where tenants seek modern, sustainable office spaces to support flexible working and talent attraction.
By industry, the bulk of demand in H2 came from the Professional, Scientific and Technical Services sector (24%), followed by Healthcare and Social Assistance (13%) and Public Administration and Safety (7%).
Tenant CS is a commercial tenant advisory service that offers tenant representation services in Adelaide. We also cater for businesses across Australia, in cities such as Sydney, Melbourne, Perth, Brisbane and Canberra, but also in regional areas.
We represent you, the tenant, and our in-depth knowledge of the Australian leasing market gives our clients the competitive advantage when it comes to finding a space or negotiating a commercial lease.
So, if you’re on the hunt for tenant representation in Adelaide, book a call with our team today!
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