Why offices are disappearing along St Kilda Rd

Anzac Station has reshaped access to St Kilda Rd, accelerating office withdrawals and a surge in residential development along the boulevard. Picture: Metro Tunnel

Melbourne’s most famous boulevard is undergoing a quiet but dramatic shake-up, with office towers being pulled from the market and converted into homes, creating an unexpected squeeze on premium workplaces.

Colliers national director Scott Orchard said the pace of change along St Kilda Rd had accelerated sharply over the past year.

“We’ve seen a rush of assets come to market, a withdrawal of stock, and a growing split between buildings that work, and those that don’t,” Mr Orchard said.
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“That’s fundamentally changing how investors and occupiers are viewing St Kilda Rd.”

New Colliers figures show more than 10 major office assets along the boulevard have been brought to market since late last year, with more than half already sold or under offer.

At the same time, about 7.5 per cent of office stock has been quietly withdrawn over the past five years as owners pivot away from traditional commercial use, often eyeing residential or mixed-use redevelopment instead.

Mr Orchard said those exits were not weakening the precinct, they were tightening it.

“Structural shifts in occupier behaviour are pushing some buildings in very different directions,” he said.

Office buildings along St Kilda Rd are being sold, withdrawn or repurposed as the precinct shifts away from traditional commercial use.

“What that’s doing is reducing supply for quality office space and supporting stronger leasing outcomes for the best assets.”

The shift has gathered pace following the opening of Anzac Station, which has directly linked the boulevard into the CBD and Melbourne’s expanding underground rail network.

“What was once seen as fringe is now effectively one stop from the city,” Mr Orchard said.

“That connectivity has changed how people think about living and working along St Kilda Rd.”

While office space is thinning out, residential development is accelerating.

Cranes are rising along St Kilda Rd and Queens Rd as developers chase demand from downsizers and owner-occupiers seeking city access without inner-CBD congestion, supported by proximity to the Royal Botanic Gardens, Albert Park Lake and Domain Rd dining precincts.

Colliers national director of development sites Jozef Dickinson said demand for premium city-fringe apartments had returned strongly.

“There’s been a clear surge in high-quality residential development,” Mr Dickinson said.

Proximity to Albert Park Lake and the city has fuelled renewed residential demand along St Kilda Rd as the precinct evolves. Picture: Jason Edwards

“Developers are responding to buyer demand for lifestyle, transport access and amenity, and St Kilda Rd offers all three.”

Education and institutional tenants are also following the transport investment.

Monash University has committed to about 6000sq m at 509 St Kilda Rd, reinforcing the precinct’s appeal for large organisations seeking accessibility without a traditional CBD address.

On the office side, leasing specialists say the residential pivot has created a scarcity factor for the remaining high-quality stock.

Colliers national director of office leasing Matt Cosgrave said occupiers were becoming more selective, favouring buildings with strong amenity, natural light and transport access.

St Kilda Rd is undergoing a major transition as older office stock gives way to apartments and mixed-use projects. Picture: NewsWire / Andrew Henshaw

“The shift toward residential has reduced the supply of quality office space,” Mr Cosgrave said.

“That’s helping underpin values and drive leasing activity for buildings that meet modern occupier expectations.”

With future office supply constrained and residential demand continuing to rise, analysts say St Kilda Rd is entering a new phase, one defined less by single-use towers and more by a balance of homes, workplaces and amenity.

After decades as a commuter strip, the boulevard is fast becoming a genuine live-and-work destination, and one of the clearest indicators yet of where Melbourne’s post-pandemic property market is heading.

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david.bonaddio@news.com.au