As we reflect on 2024 as a year of consolidation for many businesses, 2025 may present a prime opportunity for investors to secure premium assets as market conditions continue to recalibrate.
With the new year well underway, we reflect on 2024 as a year of consolidation for many businesses, with a strong focus on survival rather than expansion.
Businesses shifted their priorities toward efficiency gains rather than revenue growth to counter the ever-increasing costs of operating in our beloved State of Victoria.
Suburban assets generally performed well, particularly where land value comprised a smaller proportion of the overall asset value. Meanwhile, well-located and functional properties—especially industrial—remained highly sought after, with sales activity under $5 million and leasing holding steady despite broader market challenges.
The industrial sector saw significant growth, with approximately 950,000 square meters of new industrial space delivered, nearly doubling the long-term average. In contrast, the office sector faced challenges, with the CBD vacancy rate rising to 19.8% by late 2024, indicating an oversupply in that segment.
At the larger end of the market, investor and developer activity was notably subdued. Rising construction costs, higher interest rates, and increasing property taxes constrained larger transactions, leading to a more cautious approach. Approximately $900 million in investment sales was transacted, marking the lowest annual level in 20 years. The majority of these sales were concentrated in the CBD, accounting for 76% of the total.
As the market continues to recalibrate to meet buyer demand, and with interest rates beginning to drop, the first half of 2025 may present a unique opportunity to re-enter the market and secure premium assets that are rarely available in stronger conditions.
CVA’s sales and leasing volumes remained robust maintaining our position as the No. 1 agency in transaction volume across Victoria.
For those who remember Victoria in the 1990s, today’s landscape feels familiar, with many opting for a move to the Sunshine State. However, history shows that Victoria rebounded with great strength—and we believe it will again.
As proud Melbournians, we at CVA remain committed to making Melbourne thrive again.
