Amanda Falahey
Director and Canberra Lead | Property Advisory at Charter Keck Cramer
11 August 2026
For Canberra’s office tenants, the latest vacancy figures contain a clear upside: more choice and greater negotiating leverage.
Canberra’s office vacancy rate increased sharply from 10.2% to 14.7% over the six months to July 2026, following the addition of more than 52,000 square metres of new supply. For organisations considering their future accommodation needs, particularly those with a lease expiry in the next two to three years, this creates an opportunity to test the market and potentially secure better premises on more favourable terms.
That does not mean relocating will automatically be the right decision. Fitout costs, make good obligations, operational disruption and the specific needs of each organisation must all be considered. However, the balance has shifted. Occupiers now have more options, and choice is one of the most valuable forms of leverage in a lease negotiation.
Shocking, but not unexpected
At last week’s Property Council of Australia ACT Mid-Year Office Market Report event, the mood in the room could be summarised simply: the result is shocking, but we knew it was coming.
The headline vacancy figure is confronting, but it does not tell the full story. According to the Property Council of Australia’s July 2026 Office Market Report, the increase has been overwhelmingly concentrated in Civic.
Civic’s vacancy rate more than doubled, increasing from 12.0% to 26.4% in six months, with net absorption of negative 116,934 square metres. By comparison, vacancy across Canberra’s non-Civic precincts moved only marginally, from 9.4% to 9.6%, despite accommodating most of the new supply entering the market.
This is therefore not a uniform Canberra-wide downturn. It is a market increasingly divided by location, building quality and the ability of individual properties to meet contemporary occupier expectations.
Now is the time for occupiers to test the market
For tenants, these conditions create a genuine window of opportunity.
Greater vacancy increases the likelihood of landlords competing for quality tenants. That competition can translate into stronger incentives, fitout contributions and more flexible lease structures. It can also create opportunities to secure better-located, more efficient or higher quality premises that may previously have been unavailable or unaffordable.
A “better deal” should not, however, be measured by headline rent alone. Occupiers should consider the complete commercial and operational outcome, including:
- the efficiency of the floorplate and the amount of space genuinely required;
- landlord contributions towards fitout or refurbishment;
- lease flexibility and expansion or contraction rights;
- options, break clauses and makegood obligations;
- building performance, sustainability and operating costs;
- employee amenity, accessibility and workplace experience; and
- the cost and disruption associated with relocating.
The strongest outcome may still be a renewal in the existing building. But even then, understanding the available alternatives gives an occupier a much stronger basis from which to negotiate.
Organisations with a lease expiry approaching within the next two to three years should begin that work now. A competitive process takes time, particularly where procurement, security, technical or government requirements are involved. Starting early allows decisions to be made from a position of choice rather than urgency.
Civic’s older stock cannot be ignored
The more difficult question raised by the report is what happens to Civic’s older office buildings.
The panel from the event was clear that something needs to be done. A proportion of the existing stock no longer aligns with what many tenants expect from a contemporary workplace - whether that relates to amenity, building services, environmental performance, floorplate efficiency or the experience offered to employees.
Adaptive reuse is frequently presented as the logical solution, particularly conversion to residential or other uses. In practice, it is unlikely to provide a universal answer. Floorplate depth, access to natural light, building cores, services, fire requirements, structural constraints and conversion costs can make reuse technically or commercially unviable.
That leaves the market with an uncomfortable reality: the problem is widely understood, but there is no simple or agreed solution.
Each building will require an individual strategy. For some, substantial refurbishment and repositioning may be viable. Others may require redevelopment, conversion to a different use or, eventually, removal from the office market altogether. Resolving this will require cooperation between owners, investors, planners and government rather than reliance on a single policy response.
Civic needs people, not just occupied space
The other strong message from the panel at the event concerned the importance of Federal and ACT Government employees returning to their workplaces more consistently.
Government is Canberra’s largest employer and has an influence on the city that extends far beyond the office buildings it occupies. When employees are not present, the consequences are felt by cafés, retailers, hospitality businesses, public transport and the broader Civic economy. Buildings may remain leased, but the surrounding streets can still feel like ghost towns during the working week.
This is not necessarily an argument for a blanket five-day return to the office or for abandoning workplace flexibility. It is recognition that employment policies have place-based consequences.
More consistent attendance from Canberra’s largest employers would help restore predictable weekday activity, support local businesses and rebuild confidence in Civic as a place to work and invest. An office market - and a city centre - is not sustained by leases alone. It needs people.
An immediate opportunity within a longer-term challenge
Two things can be true at once.
The latest vacancy result presents a serious structural challenge for Civic, its building owners and the businesses that rely on a functioning city centre. At the same time, it creates one of the strongest occupier markets Canberra has experienced in recent years.
For tenants, the immediate message is clear: do not wait until a lease expiry is imminent. Review what your organisation needs from its workplace, understand the alternatives and test whether the current market can deliver a better commercial and operational outcome.
The organisations that benefit most from this period will be those that start early, define their requirements clearly and negotiate from a position of choice.
If you have a lease expiry coming up in Canberra or you’re just looking for some advice, reach out to our ACT team.
