Canberra's Commercial Property Pipeline Swells as Vacancy Rises

Canberra's commercial property market is entering a period of significant transition. With the city's largest office project, the 35,000 sqm building at 15 Sydney Avenue, fully pre-committed by the Australian Taxation Office and due for completion in the final quarter of 2025, and a wave of additional supply still to hit the market, businesses are reassessing their space needs. The office vacancy rate has already climbed to 10.7 per cent in 2025, and new data shows that roughly 109,000 sqm of new office space entered the market that year, with another 53,000 sqm scheduled to arrive in 2026.

A Wave of New Supply

Capital Property Group is behind several of the largest developments reshaping the city centre. The firm's 65,000 sqm mixed-use precinct at the corner of London Circuit and Northbourne Avenue will feature carbon-neutral buildings, a hotel, and apartments. Construction was scheduled to begin by November 2024, with completion targeted for 2027. Another major project, a $150 million, 14,000 sqm office building at Constitution Place, is set to commence construction in mid-2024 and finish in late 2026. The developer has also purchased a $66 million site near City Hill for a mixed-use project that will include 502 dwellings, 76 of them affordable, along with a hotel and commercial space. Construction on that site could start in 2026, with completion staged between 2028 and 2034.

What This Means for Tenants

For businesses leasing office space, the influx of new supply may shift negotiating power. The ATO's pre-commitment at 15 Sydney Avenue demonstrates that major government tenants are still driving demand for premium, energy-efficient buildings. But with vacancy rising and new buildings coming online, especially the 65,000 sqm London Circuit precinct and the Constitution Place office tower, tenants in older buildings may find landlords more willing to offer incentives. Carbon-neutral features at the London Circuit development also signal that sustainability credentials are becoming a standard ask from both government and private-sector occupiers.

Outlook for the Year Ahead

With more than 50,000 sqm of fresh supply due in 2026 and construction timelines stretching into the late 2020s for some sites, the Canberra CBD is set for a prolonged period of renewal. Tenants should watch for leasing opportunities in the new premium stock, while landlords of existing buildings may need to invest in upgrades to stay competitive. The combination of elevated vacancy and a strong pipeline means the market is unlikely to tighten quickly. Businesses planning a move or renewal in the next 18 months would be wise to start their search early, as the best deals in the best buildings are likely to be taken first.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.