In a striking contrast to broader Australian trends, Wollongong's central business district has recorded a significant tightening of its office market over the past year. While national vacancy rates climbed to concerning heights, the Illawarra hub demonstrated resilience and growing appeal for businesses.
Defying the National Downturn
Fresh data from the Property Council of Australia reveals that total office vacancy in Wollongong fell to 13.4 per cent in January 2026, down from 15.2 per cent a year earlier. This positive movement occurred as the nationwide office vacancy rate increased from 15.2 per cent to 15.9 per cent, marking the highest level seen since January 1995.
Matthew Wales, Property Council Illawarra and Shoalhaven Regional Director, described the local decrease as a "real vote of confidence in Wollongong's CBD" regarding its ability to attract and retain commercial tenants. "We're seeing the same 'flight to quality' trend that's playing out nationally," Mr Wales noted. "Better buildings with the right location and amenity are winning, but older stock needs upgrading, or a new use, if it's going to compete."
Leading the Nation in Improvement
Remarkably, Wollongong achieved the largest vacancy decrease across all major Australian cities during the six months leading to January 2026. It outperformed both the Canberra and Perth CBDs, which were the only other major urban centres to record any decline in empty office space.
This improvement represents a complete reversal from the previous year, when Wollongong's office vacancies actually increased. The turnaround has been particularly pronounced in premium A-grade locations, where vacancies dropped sharply to 13.3 per cent from 17.1 per cent. These A-grade buildings are defined as "high quality" properties that are either reasonably new or have undergone substantial refurbishment.
Strong Absorption Across All Grades
The net absorption figures for Wollongong tell an equally compelling story. With more than 4,500 square metres of office space experiencing positive net absorption, every building grade witnessed more businesses moving in than moving out. This balanced demand stands in stark contrast to markets like Sydney CBD, which struggled with uneven demand across different quality tiers.
"While other markets struggled with varying levels of demand across the grades, such as the Sydney CBD which had strong demand in A-grade office space but fell in lower grades, Wollongong saw positive absorption across all grades," the report highlighted.
Capitalising on Momentum
According to Mr Wales, the current results present a "clear opportunity" for Wollongong to build upon this positive momentum. "Wollongong has all the right ingredients to attract businesses and workers, a great lifestyle, a growing professional services base, and proximity to Sydney," he explained.
The regional director emphasised that practical amenities play a crucial role in drawing people back to office environments. "People will come into the office when it's easy. Safe bike storage, showers, lockers, good cafés at ground level, and buildings that feel modern."
Looking forward, Mr Wales called for collaborative efforts between government and industry to sustain the CBD's competitive edge. "State and local government need to work with industry to make it easier to refurbish and renew buildings, back practical upgrades, and support reinvestment that keeps the CBD competitive."
This encouraging data suggests that Wollongong's commercial property market is developing a distinctive strength, potentially positioning the Illawarra region as an increasingly attractive alternative for businesses seeking quality office space outside traditional metropolitan hubs.
