More than a quarter of office space in Canberra's city centre is empty and unleased as demand slumps, according to the latest data from an Australian property body.
The office vacancy rate in Civic increased from 12 per cent to 26.4 per cent in the past six months, driven largely by ended leases releasing 116,934 square metres of office space, the equivalent of about 16 soccer fields, back onto the market.
Canberra's overall office vacancy increased sharply in the first half of 2026, from 10.2 per cent to 14.7 per cent making it the third-highest total on record, according to the latest Property Council of Australia Office Market Report.
Property Council ACT executive director Ashlee Berry said the challenge for Canberra's office real estate remained Civic.
"While the broader market has proven relatively resilient, vacancy in the city centre has increased significantly and that has implications for businesses, workers and city vitality," she said.
"If Canberra wants to function as a network of thriving centres, Civic must remain the anchor. A strong city centre supports investment, employment, retail activity and confidence across the entire territory."
Excluding Civic from the figures, the office market remained relatively stable, increasing from 9.4 per cent to 9.6 per cent despite substantial new supply.
Ms Berry said Canberra's office market had experienced a significant shift as more than 52,000 square metres of new supply entered the market and demand moved into negative territory.
She said the results also reinforced the divergence between different types of office stock.
The report shows A-grade vacancy increased from 8.4 per cent to 13.6 per cent, while B-grade vacancy increased from 11.0 per cent to 19.3 per cent. C-grade was the only segment to record an improvement, with vacancy falling from 14.5 per cent to 13.7 per cent following positive net absorption and building withdrawals.
"Not all parts of the market are moving in the same direction. The fact that C-grade vacancy improved shows there is still demand for the right product in the right location, but owners need policy settings that support reinvestment, refurbishment and renewal," the executive director said.
Ms Berry said the "relatively constrained" development pipeline provided an opportunity for the market to stabilise in the coming years.
About 15,000 square metres of new office space is scheduled to enter the Canberra market in the second half of 2026, followed by 40,113 square metres in 2027. A further 74,919 square metres is expected from 2028 onwards, with 162,984 square metres currently mooted.
Ms Berry called for the ACT government to encourage renewal of older buildings and to remove or reduce the embattled lease variation charge to draw businesses back to Civic.
