Australia has reached a “turning point” as more workers return to the office and vacancy rates begin to stabilise across the country’s CBD offices. The shift comes as employers and employees continue to wrestle over work-from-home rights.

Australia’s CBD office markets are showing signs of recovery, with some major cities recording positive rates for the first time in years as workers head back to the office. The latest Property Council of Australia data found the CBD office vacancy rate had crept up from 13.7 to 14.3 per cent over the first six months of the year, but this was largely due to a wave of new office spaces hitting the market.

Despite this, Ray White head of research Vanessa Rader said the data suggested “the worst of the office market correction may be behind us”.

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The Sydney CBD vacancy rate increased from 12.8 to 13.7 per cent, due to high levels of supply outstripping demand.

However, it recorded 56,532 square metres of annual net absorption of space, which was the highest on record since 2016.

“This positive absorption represents a dramatic shift from the negative trends that characterised the market through much of the post-pandemic period and suggests that return-to-office initiatives are gaining genuine traction among Sydney businesses,” Rader said.

Melbourne CBD continues to face the most significant challenges with vacancy and saw rates drop from 18 to 17.9 per cent.

The market saw a positive absorption of 1,446 square metres, which Rader noted was a “meaningful shift” for the negative absorption recorded over the past three years.

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Nationally, CBD markets recorded a combined net absorption of 63,738 square metres, which was some of the strongest performance in several years.

Property Council chief executive Mike Zorbas said the group had now seen a year and a half of positive demand for office space and there were “more businesses taking up office space than leaving behind”.

Rader said the recovery appeared to be driven by several factors, including businesses implementing return-to-office policies. There’s also demand for more premium CBD buildings.

“While the recovery trajectory remains gradual, the consistent positive absorption across multiple CBD markets suggests a genuine turning point,” Rader said.