How to choose the right office to invest in

Office demand has become increasingly selective. While leasing activity has begun to recover across Australian CBDs, vacancy rates remain elevated. This apparent contradiction reflects a market that is no longer uniform, with demand concentrating in higher-grade, better-located buildings. For investors, this underscores a simple reality: not all offices are equal and performance depends on a building’s ability to attract and retain tenants.

Tenant demand comes first

The general tests of a good property investment still apply to office: location, tenant strength, lease profile and building quality. What sets office apart is how much rides on tenant appeal. Some commercial assets can be adapted for different occupiers more readily than others.

Office buildings that lose tenant appeal can be hard and expensive to reposition, so the durability of demand carries more weight in the investment case. Everything else in the assessment follows from it, because an office without tenants may produce limited income and reduced value, no matter how well it is built.

Connectivity and the commute

Access shapes demand. With many organisations now settling on around three days a week in the office, often concentrated around midweek,¹ proximity to public transport and the ease of the commute have become central to where tenants choose to locate.

Buildings near major transport hubs are often better placed to attract tenants, which can support occupancy and rent. The constraint is that location is fixed. A well-built asset in a weak position cannot be moved closer to demand, and that limits how much refurbishment can do for it.

Grade, design and flexibility

Tenant expectations of the building itself have risen. Premium and A-grade space in well-located towers continues to attract leasing interest, while older secondary stock faces structural pressure.

The divergence is reflected in recent leasing data: over the second half of 2025, premium and A-grade space in the Sydney CBD recorded positive net absorption, while B-grade and other secondary stock saw vacancy rise.²

Floorplates suited to flexible, collaborative working, good natural light, and the ability to reconfigure space all influence whether a tenant commits and for how long. Design that cannot adapt dates quickly, and the cost of bringing a building up to current standards sits against the income it produces.

Amenity and sustainability

Amenity has moved from a differentiator to an expectation. End-of-trip facilities, quality common areas and on-site services now form part of how tenants judge a building. Sustainability has become measurable in the same way: energy performance feeds into rent and vacancy, and the premium attached to highly rated buildings is now part of the investment case rather than a side issue.

These features support demand, but they also require capital, and the spending needed to keep an older building competitive is part of the investment case rather than separate from it.

Reading the demand signals

These factors combine into a single judgment: how durable is tenant demand for this specific building. Net absorption, the leasing pipeline and the gap between prime and secondary vacancy all show where demand is concentrating.

A building that scores well on connectivity, grade, design and amenity is better placed to hold tenants and income through a cycle. None of this guarantees performance. Demand can shift, supply can arrive, and an asset bought at the wrong price will struggle whatever its quality.

An office is its tenants

Choosing an office comes down to judging how durable tenant demand for the building will be. The general tests of a good property investment still hold, but in office they concentrate on a single question: will tenants want this building, at a workable rent, across the life of the investment?

The assets best placed to answer it, well-located, well-built and well-serviced, may be better positioned to hold their value as the market continues to divide by quality.

1. CBRE, 2025 Australian Office Occupier Survey: office attendance averaging around three days a week, concentrated on peak days from Tuesday to Thursday.
2. Property Council of Australia, Office Market Report, January 2026: national office vacancy of 15.9%. In the Sydney CBD over the second half of 2025, premium and A-grade space recorded positive net absorption while B-grade vacancy rose (B-grade up from 14.4% to 16.0%), the prime versus secondary divergence behind the flight to quality.