Canberra's Civic Offices Face High Vacancy Despite Overall Improvement
Office vacancy rates in Canberra have shown a slight decline over the past six months, yet the Civic district continues to grapple with significant challenges in attracting businesses. According to industry experts, while the broader market is improving, the heart of the city remains underutilised, with many federal government departments shifting their operations south of the lake.
Vacancy Rates Reflect a Mixed Picture
The overall Canberra office vacancy rate decreased from 10.7 per cent to 10.2 per cent during the six months leading up to January 2026. This places Canberra as one of only two Australian capital cities to record a drop in available office space. However, this rate has remained above the long-term average for four consecutive years, indicating persistent issues in the market.
In Civic, the situation saw some improvement, with vacancy rates falling from 14.1 per cent to 12.0 per cent, absorbing 16,230 square metres of space. Despite this progress, Property Council ACT chief executive Ashlee Berry emphasised that a 12 per cent vacancy is "still too high for the heart of our city." In stark contrast, Barton is nearly fully occupied with a vacancy rate of just 1.8 per cent, while Canberra Airport held steady at 10.3 per cent.
Government Relocation Drives Vacancies
Stephen Oxford, managing director of Australian Strategic Property Advisors, highlighted that large office spaces designed for federal government departments are particularly difficult to fill once these agencies relocate. He pointed out that the Property Council's statistics may not fully capture the extent of the problem, as some leased offices remain empty due to transitional moves.
"Some of the buildings... the tenants [are] transitioning to new accommodation, in recent months there's vacancy all through the city, so the numbers [are] hiding this challenge," Mr Oxford explained. Major relocations include the Australian Taxation Office moving to Barton in mid-2026, over 200 staff from the Department of Home Affairs shifting to Belconnen and Brindabella Park, and the Department of Foreign Affairs consolidating its operations in the Parliamentary Triangle later this year.
Barton's Appeal and Limitations
Proximity to Parliament House has traditionally been a key factor driving office moves to Barton, according to Mr Oxford. The precinct offers new, high-quality buildings that meet stringent government energy standards, making it an attractive option for federal departments. However, he noted that Barton lacks the amenities of a traditional central business district.
"Although I say that and then I think, Barton is like not a town centre, it's an employment precinct, it doesn't have the road and transport network, it doesn't have the parking, it doesn't have the shops, doesn't have the post office, it doesn't have all those things that a CBD has," he remarked.
Civic's Future and Redevelopment Challenges
At a recent ACT Property Council office market report event, Canberra Airport head of property Richard Snow described the CBD as "the heart and lungs of a city," but noted that old office buildings in Civic are being left behind as government departments move south. He attributed part of the issue to ongoing construction projects that are disrupting the area.
Andrew Balzanelli, senior director at JLL, suggested that an oversupply of offices in Civic could eventually lead to a "re-centralisation" of workers back into the city. Several large office spaces are expected to open in and around Civic during 2026, potentially offering new opportunities. However, he acknowledged that convincing employees to return to the office remains a major challenge for many departments.
Mr Oxford added that renovating older buildings in Civic to meet modern needs is often not economically viable. "It is more challenging to upgrade a 25 to 40-year-old building than a 15-year-old building... my view on what should happen in the city is those older buildings that are hard to upgrade environmentally to the government specifications, they should be used for other purposes like student housing or residences," he proposed.
