Prime net face rents held firm through Q3 while leasing incentives continued to tighten across the eastern core. Here is what that means for owners heading into 2027.
Prime-grade net face rents in the Melbourne CBD held firm through the third quarter of 2026, extending the stabilisation trend that began in late 2025. Leasing incentives in the eastern core continued to compress, with typical prime incentives now sitting in the low-to-mid 30% range — down from peaks above 40% in 2024.
Enquiry volumes were led by professional services, healthcare-adjacent occupiers and government-adjacent agencies. The defining pattern of the quarter was flight-to-quality: tenants are signing smaller floorplates in better buildings rather than larger floorplates in secondary stock. Premium and A-grade vacancy continued to tighten, while B- and C-grade buildings without a clear repositioning plan are falling further behind.
Heading into 2027, we expect prime effective rents to grind modestly higher as incentive compression continues, while the gap between prime and secondary stock widens further. Owners of secondary assets should be planning capex and repositioning strategies now, rather than waiting for the market to do the work for them.
