Investment Rating - The report indicates a positive outlook for the Australian office market, with prime yields stabilizing and an expectation of continued recovery, particularly in Sydney and Brisbane [1][20]. Core Insights - There is a notable improvement in sentiment within the office investment market, with significant transactions occurring primarily in Sydney, leading to stabilized prime yields for core assets [1][20]. - Net absorption across all CBD markets returned to positive territory in 2024, with a total of 81,000 sqm recorded nationally, indicating strong tenant demand, especially for high-quality assets with strong ESG credentials [2][30]. - Rental performance is improving, with Brisbane experiencing an 18.3% increase in net effective rents year-over-year, while Adelaide saw a 10.5% increase [3][48]. - The report highlights a divergence in performance by location, with major CBDs outperforming non-CBD markets, and a focus on high-quality, well-located premises [30][48]. Summary by Sections Leasing and Capital Markets - Prime yields have stabilized, particularly in Sydney, with significant deal volumes indicating a recovery in the market [1][20]. - The average prime yields remained unchanged in Sydney and Brisbane, confirming the stabilization of core asset values [20]. Demand and Absorption - Net absorption returned to growth, with all capital cities recording positive absorption except for Melbourne CBD [30]. - The demand for newly built products remains high, driven by occupiers focusing on high productivity and employee well-being [30]. Rental Performance - Brisbane led the rental growth with a 14.2% increase in net face rents, while Adelaide followed with a 9.1% increase [48]. - Sydney's average incentives decreased for the first time since 2019, indicating a shift in the rental market dynamics [48]. Vacancy Rates - The overall vacancy rate across Australian capital cities was 13.7% at the end of 2024, with Canberra and Brisbane having the lowest rates at 9.2% and 10.2%, respectively [39]. - The development pipeline in major CBDs is forecasted to deliver approximately 970,000 sqm of new supply over the next three years, which is expected to tighten leasing markets and drive rental growth [39].