Fresh insights from Knight Frank reveal an exciting shift happening in Melbourne’s St Kilda Road and Southbank office markets, and the ripple effects are expected to be felt across the entire Port Phillip area.
The transformation could influence everything from the beachside energy of St Kilda to the leafy streets of Albert Park and Middle Park, and the evolving industrial character of Port Melbourne.
A Game-Changing Space Crunch
The numbers tell a compelling story. More than 130,000 square metres of office space in St Kilda Road and 48,000 square metres in Southbank are being withdrawn from the market. According to Knight Frank, most of these older B and C-grade offices are being repurposed into residential developments. This shift is creating a commercial space shortage that is driving vacancy rates to 15-year lows (source).
While premium A-grade office space is not being removed, it is becoming increasingly sought after and is expected to command higher prices.
Big Moves Making Headlines
Several major property developments are reinforcing this transformation:
- 420 St Kilda Road is making waves thanks to its A-grade status and location just a short walk from the soon-to-open Anzac Station. With more than 80 per cent occupancy and nearly $6 million in annual rental income, the building is drawing strong attention from investors.
- 346 St Kilda Road is one of the last park-fronted development sites available on the boulevard. With uninterrupted views of the Botanic Gardens and Shrine of Remembrance, and flexible zoning for either residential or hotel use, it offers a rare opportunity.
- The recent $42.55 million sale of 468 St Kilda Road to Bayley Stuart reflects growing investor confidence in the corridor. The 14-storey B-grade building is already 75 per cent leased and shows solid market momentum.
What This Means for Port Phillip
The office market shake-up along St Kilda Road is likely to benefit the broader City of Port Phillip. With less space available in the core precinct, businesses may look to relocate to surrounding suburbs like St Kilda, Albert Park, and Port Melbourne. These neighbourhoods offer an attractive blend of lifestyle, proximity to the CBD, and improved accessibility.
The introduction of Anzac Station as part of the Metro Tunnel project will make it even easier for workers and clients to move between the CBD and Port Phillip, further increasing the area’s appeal.
Whether you are running a business, investing in property, or simply living in the area, this transformation represents a significant moment for Port Phillip. The signs point to increased demand for office space, new development opportunities, and a continued flow of investment into one of Melbourne’s most dynamic regions.
