One of the contributing factors to this increase is the surge in new office space. In just one year, 100,000 sqm of additional office space was added to the Melbourne market, which has only made the vacancy crisis worse. It\u2019s a classic case of supply outweighing demand, as businesses are opting for smaller, more flexible spaces\u2014or moving to areas outside the Central Business District (CBD).<\/p>\n\n\n\n But there\u2019s more to the story. Victoria\u2019s new work-from-home legislation is expected to have an even bigger impact on office demand. Under the new rules, employees in both the public and private sectors will be legally entitled to work from home for at least two days a week. While the legislation is designed to offer workers greater flexibility, it could further dampen demand for office space, particularly in the CBD.<\/p>\n\n\n\n The rise of remote work has already forced many businesses to reconsider their office needs. With fewer employees coming into the office, companies are increasingly choosing hybrid models, where workers split their time between home and the office. The new law, set to be introduced in 2026, will likely accelerate this shift and further erode the need for large office buildings in the heart of Melbourne.<\/p>\n\n\n\n Despite the rising vacancies, Cath Evans, Executive Director of the Property Council of Victoria, remains optimistic about the long-term future of prime office space in Melbourne. Evans believes that while vacancy rates are concerning, Melbourne will continue to be an attractive destination for businesses, especially in the CBD. In her view, the increase in supply offers real opportunities for tenants who are looking to take advantage of lower rents and the increased availability of space.<\/p>\n\n\n\n Yet, it\u2019s hard to ignore the broader economic implications. With the city\u2019s property sector<\/a> already battling economic headwinds and dealing with higher taxes, the outlook is far from rosy. The Business Council of Australia has voiced concerns that the work-from-home legislation could lead to a reduction in investment and a loss of jobs, especially in sectors that heavily rely on physical office spaces.<\/p>\n\n\n\n![\"Office\"](\"https:\/\/en.econostrum.info\/au\/wp-content\/uploads\/sites\/7\/2026\/02\/visual-selection-15-780x800.png\")
<\/h2>\n\n\n\n
Work-from-Home Legislation: Adding Fuel to the Fire<\/h2>\n\n\n\n
The Long-Term Outlook: Opportunities Amidst Challenges<\/h2>\n\n\n\n