Australia’s office recovery is gaining momentum but becoming more selective, supported by stronger investment, tightening Premium vacancy and constrained new supply.

Key highlights:

• Office investment activity almost doubled to $4.0bn in Q3.
• Premium office continues to outperform as vacancy tightens.
• Constrained supply is supporting Prime rental growth.
• Narrow office-to-bond yield spreads are not unusual when inflation is elevated, reducing the case for further yield expansion.
• Income growth and asset fundamentals are becoming increasingly important to investment returns.

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