Melbourne's office market is at a crossroads and if you're a business leader with leases expiring in the next few years, the decisions you make now will define your workplace for the decade ahead.

In this recording of JLL's Melbourne Future Forward panel event Westpac's Mark Rose reveals why his team needed three full years to execute their 48,000 sqm office strategy, and why waiting until 18 months out is already too late. You'll discover the hidden truth behind Melbourne's headline 20% vacancy rate: while the media talks about abundant space, finding premium, contiguous floors that meet modern standards is a completely different story.

Charter Hall's Andria Carniato shares how the company leased 111 Bourke Street to 95% in just 16 months during a down market, and the portfolio strategies that unlock value most tenants never see. Connor McCauley, JLL sustainability expert, breaks down the embodied carbon equation that's reshaping fit-out decisions, with real examples of how Australia Post's workstations found new life at CBA.

Whether you're managing 50,000 sqm or 5,000, this conversation will change how you think about timing, sustainability, and the tenant-landlord relationship. The question isn't if your next move matters, it's whether you're starting early enough to get it right.

TRANSCRIPT - JLL Future Forward - Melbourne Panel 30.07.26

00:00:14 — Moderator: I've been really excited for today. We're in a real treat. I think this is a strong panel, and we've got a lot of content to cover, so we will do our best to get through it all, but let's jump straight into it.

Mark, thinking back on your last office move, what's one thing you wish someone had told you three years out?

00:00:36 — Mark: Yeah, great. I guess from a Melbourne context, our last office move was probably Festival Tower in Adelaide. I think the thing we would've liked to know there, look, to be perfectly honest, is probably how aggressively we were going to grow and how aggressively economic rents were going to grow, especially in Adelaide.

Adelaide's a very funny market. It's probably the story that Annabel talked about in Melbourne with high vacancy, but very limited vacancy in the premium grade assets. We did that, and we would've locked in probably for longer, and for more space, if we had known the growth story that was coming over there in terms of rents that they were attracting after we did our deal.

00:01:30 — Moderator: Good point. You think three years is plenty of time and the market's not going to change that often, but it can look very different from the start to the final product.

Andria, you've seen a lot of office moves over your time being a landlord. What's something you would recommend to occupiers if they had a long lead time from a landlord's perspective?

00:01:52 — Andria: Oh, from my perspective, it's always about just the value of the relationship and the communication that you can give back to your landlord. A tenant and landlord relationship should be seen as a partnership, very similar to what Jess was talking about in terms of the tenant representative versus the landlord and the tenant. It's a very similar story for us.

Often a landlord, if there is a level of trust and really good communication, sometimes we know what the tenant's probably going to do before they do, to be honest. The earlier that we can open the dialogue and have those types of conversations, the easier it becomes for everybody, and the better outcome everybody gets. As a landlord, to be totally honest with you, a full building is worth more than an empty one. Whilst everybody is there to maximise their outcomes, there's always a happy medium where a tenant has some comfort about what they've got and locked in a good deal and rent for a period of time, and so is a landlord. Not everybody's always going to get what they want, but as long as everybody goes in understanding that and trying to find that partnership approach, it's going to be a good outcome.

00:03:08 — Moderator: You're 100% right. In years gone by, a lot of tenants have always thought that a good relationship is only if you're a full-building tenant—then you've got swagger. But now we're really seeing that partnership as small as 200 square metres and almost spec suites, so we're definitely seeing that transitioning journey.

Connor, what's the most common thing landlords and tenants get wrong about each other?

00:03:38 — Connor: I'm actually going to use the idea that Jess had around all being on a plane together. When we think through that sustainability lens and you think about a plane, we're actually all going in the same direction. Depending on your targets and your strategy, it could be net zero by a certain date or living in an equitable, inclusive society.

It's really up to the pilot and the hostesses or hosts as the landlord, and all of the passengers as the occupiers, to set that location together. Really how they do that is when they get the ticket—the lease. Let's make sure that we know where we're going, it's going to be comfortable, and we know we're going in the same direction. We all have similar targets, so let's just set that out in our ticket or lease upfront and get on with it. There's not much cost that goes into that, but we know we're going in the same direction.

00:04:49 — Moderator: Are they recycling the coffee cups at the end? That's probably what you want to know.

00:04:53 — Connor: Exactly.

00:04:57 — Moderator: During Annabel's presentation, we heard 20% vacancy. We've all heard those headlines in the papers: "Melbourne, we can kick the can down the road; there's plenty of time to wait. We don't need to focus on Melbourne right now because supply is in abundance."

Andria, can you walk us through what 20% vacancy really represents? What's actually available today for a 5,000 square metre tenant wanting a prime location and modern amenity?

00:05:27 — Andria: You almost have to flip it back to the tenant for a moment. I think the last figures that Annabel used were something like 68% of the vacancy sits in around 10% of the assets, with that structural piece being a really important one. But if you flip it, there are actually some pretty good options out there that otherwise would sit in secondary locations or assets that might be right for a tenant.

From a landlord's perspective, we see 20% vacancy and acknowledge it's probably not quite as dire as it sounds, but I've got a really good example at 111 Bourke Street. Essentially, I had an East End option with a material contiguous bit of space. The competition I was dealing with would consider what I had to work with as secondary stock or secondary locations. Regardless of whether I think my product is prime grade with a 5,000 square metre contiguous space, the reality is that tenants still have a level of choice if they are willing to compromise on certain elements or if value plays a critical part in their decision making.

You can't pretend it doesn't exist, or that just because you are East End, over 5,000 square metres, fully electrified, with great ESG credentials, that there aren't other choices.

00:07:20 — Moderator: Absolutely. 111 Bourke Street is a great example of what Charter Hall did to reinvent that asset. You put a lot of capital into that to attract new tenants.

Mark, when Westpac went to market in 2022 for your 2026 expiry, what surprised you about the options that were generally on the table or weren't?

00:07:49 — Mark: Thanks. What surprised me was how many things came out of the woodwork. Our hybrid requirement at the time was 10,000 to 12,000 square metres, though we ended up staying at our existing footprint of close to 48,000. There were ambitious development schemes that came out of the woodwork, compromised on location, where if you take a bit of cynicism to it, you're not sure it's going to work or happen.

It was the amount of things that came out four years ago that probably wouldn't today. I think people have become even more real with rents and what it takes to make something stack.

00:08:48 — Moderator: 100% agree with you. The gap between market rent and economic rent grew quite substantially in recent years due to construction costs and supply chain issues. It really makes an occupier think twice: do we really need a new building?

Speaking of three years, Mark, did that feel like the right amount of runway for Westpac, or was it driven by internal complexity? What would you say to a tenant expiring in 2029 who thinks they've got plenty of time?

00:09:29 — Mark: "You don't" would probably be the headline. As a bigger tenant—let's be brutally honest, we're a bank, we're slow and big—we don't have direct decision-making and cut-through the same way smaller organisations might. But that timeframe is what you need if you're genuinely going to move. We went to market with a very genuine desire to be open to moving. It wouldn't have worked for a 2026 expiry to go out in late '23 or early '24. It would've been impossible to move.

There's no point running a market process if you don't have enough time to actually make the move, do a fit-out, and get out of your existing premises by lease expiry, because no one's doing you any favours. It's not fair to the landlord cohort to go out on a fishing expedition or market testing exercise for a process that's never going to go anywhere.

00:11:20 — Moderator: 100%—you're not building true leverage. As Andria said, landlords generally know the next tenant move before they do.

Andria, from the landlord side, how does early tenant engagement change what you're able to deliver? What's the real risk for a tenant who waits until 18 months prior to expiry?

00:11:55 — Andria: We're probably already thinking about it in that planning phase three years out. The strength of our relationships with tenant customers, regardless of size, is critical in all our planning.

570 Bourke Street is a really good example. We knew we had upcoming material expiries and needed to plan two or three years ahead to deliver that asset—either to engage well with existing tenant customers around renewals or to attract new tenants to a secondary location in the Western core. We needed to invest upfront before that time.

We do annual NPS surveys and monthly strategic meetings to understand what tenants want, which is often around amenity, community, and how it feels when they walk in. That early planning and execution builds trust. Full buildings are worth more than vacant ones; if it minimises downtime and keeps tenant customers happy, the flow-on effect to investors makes perfect sense for us.

00:13:39 — Moderator: Communication and trust—that's perfect.

Mark, can you unpack how Westpac weighed staying and refurbishing the existing fit-out versus moving to a brand-new building? Was the embodied carbon piece hard to quantify?

00:15:21 — Mark: Yes, absolutely. It got into a almost philosophical discussion. As a tenant who can pre-commit a major development, is it better to stay in an existing building or trigger a new development that takes old buildings offline and creates more efficient city stock, despite the embodied carbon associated with new construction?

We ended up staying where we are and are going through a refurbishment. We kept the bones of our existing fit-out, completely changed the look, repurposed and reused where we could. It hasn't necessarily been much cheaper, but we were very deliberate about avoiding ripping out the fit-out to build new because of the embodied carbon story.

00:16:58 — Andria: Did you relay that message to your staff and employees around making the move through an environmental lens?

00:17:07 — Mark: It's hard to get direct comms to everyone in a big company, but we have played that back to people. We've had other good reuse stories, like in Adelaide where we packed up good workstations from our old office and moved them down the road. It wasn't about saving heaps of money, but reducing embodied carbon and waste to landfill, which is a big issue for us. It was the right thing to do.

00:17:57 — Moderator: Love that. Smaller occupiers look to the big players to see what you're doing, so you're really changing the lens.

Andria, Charter Hall has repositioned older assets to meet rising sustainability expectations. Without triggering capital churn, is it hard to justify?

00:18:39 — Andria: Some of it has to be tenant-led through early engagement. At 111 Bourke, we bought into the precinct knowing Australia Post was moving, staring down a 100% vacant asset. Before we had interested tenants, we gathered feedback from potential tenant customers, TRs, and agents.

The all-electric plant and strong ESG credentials resonated with the market. It was a material consideration in terms of capital investment, but it paid off in spades: over the last 15 to 16 months, we went from zero to 95% leased in a market with 20% vacancy. It's fully electrified across office and retail—though I do still have a diesel generator!

00:21:12 — Moderator: Connor, what are some creative ways landlords and tenants reduce their upfront embodied carbon?

00:22:24 — Connor: It's mainly driven by landlords at the moment. Lendlease developed a fit-out guide providing embodied carbon metrics. Dexus launched the "Forever Fitout" offering furniture leasing, and JLL kicked off a Furniture Solutions Business out of Hong Kong.

While furniture makes up about 20% of a fit-out's embodied carbon, 35% is in partitions, ceiling tiles, and floor tiles, which can be recycled and reused. Additionally, space planning tech now allows real-time quantification of embodied carbon before diving deeper into design.

00:23:08 — Moderator: Andria, going back to 111 Bourke Street and the workstations Australia Post had—can you tell us what happened there?

00:23:18 — Andria: Early on, a TR out of Sydney represented CBA for space at 435 Bourke Street and asked what we were doing with the workstations at 111 Bourke. We had just secured EY, who didn't need the workstations.

So in partnership between EY, Charter Hall, BGRE, and CBA, we came up with an agreement to repurpose eight floors of workstations down at 435 Bourke Street. Australia Post had done a fit-out in 2019 where 80% were sit-to-stand desks with usable life left—especially since people were in lockdown for so long! It cost about $100,000 between the three of us to pack down, store, and reassemble them, but it was the right thing to do.

00:26:01 — Moderator: Andria, Charter Hall thinks about the portfolio as a jigsaw puzzle, not just a single asset. Can you give an example of moving a tenant between buildings to unlock a bigger outcome?

00:26:28 — Andria: It's executed far less than you think, but you constantly have to think about unlocking opportunity. Recently, a tenant who secured space at a new asset needed more space between executing the lease and moving in. By intimately knowing our tenant customers, we identified another tenant with surplus space to accommodate them. It doesn't always work, but you have to try to find solutions within the portfolio.

00:27:58 — Moderator: JLL is a prime example—we were stacked down to accommodate another tenant who needed more space, and it worked out well. Regardless of tenancy size, landlords are always thinking about lease expiries.

Mark, you said location can be negotiable if costs, sustainability, and workplace quality line up. What does a landlord need to deliver in a B location to make it a real "A" option for you?

00:29:18 — Mark: The context is that we're across the road at 150 Collins Street. Larger occupiers sometimes get comfortable compromising on location. For us, the important thing is good coffee, good food, and service retail. We don't need high-end luxury stores or elite dining across the road; we need functional food options and convenience for staff who want to come in, buy lunch, and work. Location is the lever occupiers pull when you can't have it all.

00:31:51 — Moderator: In closing, what's one thing you want everyone in this room to tell their leadership team at their next meeting?

00:32:02 — Andria: Early engagement—with your landlord, staff, and steering committee. It unlocks more than you think.

00:32:18 — Mark: Get past the headline vacancy numbers. Finding a 5,000 square metre contiguous chunk with specific requirements is different from what an MD reads in the paper. Second, get clear on your requirements, decision-making, and what you can or cannot compromise on.

00:33:26 — Connor: Engage early. We all have sustainability targets, and landlords are there to help. Share information, set the goal together, and collaborate.

00:33:49 — Moderator: Thank you. I'll open it up to the room now if anyone has questions for our panel.

00:33:57 — Audience Member (Matt): Andria, what drove Charter Hall to engage so well with existing stock at 111 Bourke and 570 Bourke? Was it sustainability or price sensitivity?

00:34:26 — Andria: It's a balance of both. There are pretty good bones in most existing fit-outs. If the built form is in the right spot, there are immediate savings. At both assets, we've reused upward of 90% of the built form—replacing carpets, ceiling tiles, paint, and styling to make it feel unique to the incoming tenant. It allows us to be cost-conscious, environmentally considerate, and still offer a great incentive.

By introducing third spaces and ground-floor investments at 570 Bourke, an asset that typically wouldn't compete with 600 Bourke or the Rialto now does.

00:37:14 — Moderator: As soon as you walk into a building, occupiers are looking for an engaging lobby atmosphere for their staff and clients.

If there are no further questions, reach out to us at any time. I'll hand it back over to Jess.