For institutional fund strategies, CBD East (Collins Street) carries the strongest investor flag in Melbourne, with prime yields around 5.4%.

  • Trophy submarket (CBD East (Collins Street)) carries the strongest investor flag.
  • Prime yield: 5.4%.
  • Core funds buy income; value-add buys repositioning of secondary stock.
  • Cap-rate spread between trophy and secondary has widened post-2022.

Melbourne office fund strategy and flag

For institutional fund strategies, CBD East (Collins Street) carries the strongest investor flag in Melbourne, with prime yields around 5.4%.

TL;DR

  • Trophy submarket (CBD East (Collins Street)) carries the strongest investor flag.
  • Prime yield: 5.4%.
  • Core funds buy income; value-add buys repositioning of secondary stock.
  • Cap-rate spread between trophy and secondary has widened post-2022.

Where core funds buy

Core capital concentrates in trophy stock with long-WAULT income. In Melbourne, that's CBD East (Collins Street) and assets like Rialto Towers, Bourke Place.

Where value-add looks

Value-add capital looks at secondary Class A and convertible Class B with repositioning angle. The trophy/secondary cap-rate spread has widened post-2022, which has reopened the value-add basis for repositioning plays.

Key facts

cityMelbourne
countryAustralia
regionAPAC
classARentLocal720 AUD/sqft/yr
classARentUsd$468/sqft/yr
vacancy18.4%
typicalLeaseYears7
typicalRentFreeMonths14
submarkets5
primeYieldPct5.4%
primeYield5.4%
trophyAnchorCBD East (Collins Street)

Frequently asked questions

Where do core funds buy in Melbourne?
Trophy submarket — CBD East (Collins Street) — and the most defensible long-WAULT assets within it.

Editorial provenance

Reviewed by Kenji Watanabe — APAC contributing editor. Last updated 2026-04-15. See our methodology and editorial standards.

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