Australia's office market remained strong amid the slow growth of the economy, with vacancy rates falling in five of the eight capital-city markets, according to a report from the Property Council of Australia.

The national vacancy rate decreased marginally over the past six months to 8.3%, with vacancy in central business districts (CBD) remaining stable at 8%. Non-CBD markets, which saw their strongest level of demand in eight years, reported a decrease to 9.1%.

"Our office markets are a great economic barometer of our cities and these numbers show good demand for quality office space in most centres around the country," said Ken Morrison, chief executive of the Property Council.

Vacancy rates fell in Melbourne, Hobart, Canberra, Darwin, and Perth. Melbourne remained the tightest CBD office market, with a vacancy rate of 3.2%.

"Net tenant demand actually fell somewhat in Sydney and Melbourne over the past six months, but in such tight markets it is difficult for existing businesses to grow or for new businesses to find space," Morrison said.

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Sydney clocked the second-lowest vacancy rate at 3.9%. This, however, reflects a slight increase due to major relocations to Parramatta and tenant consolidations.

"Almost a quarter of the new supply for non-CBD markets over 2020 will be delivered in Parramatta, setting a new record for tenant absorption of office space in that market," Morrison said.

Perth, Canberra, Brisbane, Hobart, and Darwin witnessed more growth in tenant demand at a pace twice their historical averages.

For this year, 680,000 square metres of new office space will open in CBD markets, with around 80% of which will be located in Sydney and Melbourne.

"The Melbourne CBD will account for 57% of the new space coming online in the CBD markets over 2020, making it our biggest expanding CBD office market in the country," Morrison said.

The table below shows the vacancy rates in each capital city and the expected amount of new space that will be available this year:

Capital City Office Markets

City

Vacancy Rate (%)

Expected New Supply 2020 (sqm)

Melbourne

3.2

400,000

Sydney

3.9

150,000

Brisbane

12.7

n/a

Perth

17.6

19,566

Adelaide

14.0

27,000

Canberra

10.3

79,216

Hobart

4.1

n/a

Darwin

16.8

n/a