Bendigo's Office Market Faces Its Toughest Year in a Decade

Office space in Bendigo's central business district is sitting empty at rates not seen since the post-GFC slump, and commercial agents are warning that the second half of 2026 will bring no quick relief. Current vacancy across the CBD hovers around 14 percent, up from roughly 9 percent two years ago, as tenants downsize, defer renewals or quietly walk away from leases entirely.

The timing matters. Across Victoria, the property investment class that once underpinned commercial deals is under acute pressure. Landlords who relied on Melbourne-based investors snapping up regional commercial assets are discovering that pool has thinned dramatically following last year's state budget changes to land tax and commercial stamp duty concessions. Bendigo does not operate in isolation from that capital flight, and the effects are now visible in deal volumes on the ground.

The View From Mitchell Street

On Mitchell Street, several mid-tier office suites between Hargreaves Street and the Bendigo Library precinct have carried 'For Lease' signage since early 2025. One three-storey building near the corner of Pall Mall that was fully tenanted as recently as 2023 now has two floors vacant. Property management firms including Dungey Carter Ketterer have noted a softening in enquiry volumes for suites above 300 square metres, precisely the space that legal firms, financial services providers and government contractors typically occupy.

The Bendigo CBD is not alone. The Epsom and Kangaroo Flat industrial and commercial corridors, which attracted considerable interest during the pandemic-era regional migration surge, are also seeing lease renewals stall. Several light-industrial suites along the McIvor Highway service road that changed hands at premium rates in 2022 are now being re-listed at asking rents 12 to 18 percent below their previous levels, according to listings data from the Real Estate Institute of Victoria's regional division.

Hybrid working is still doing its structural damage, four years after employers promised it was temporary. City of Greater Bendigo data shows the number of staff working from its own offices on any given weekday remains about 30 percent below 2019 levels, a signal that neither the public sector nor private tenants are pulling people back five days a week. That absence hollows out the demand justification for premium office space.

New Pressures From an Unexpected Direction

There is a newer complication. The national push to build AI data centres is starting to compete for the kind of large-format commercial and semi-industrial land that Bendigo's fringes offer. While no confirmed data centre project has been announced for the Bendigo region specifically, commercial agents report that speculative inquiries from infrastructure developers, driven by energy availability and land cost, have started arriving. If that interest solidifies, it could crowd out more conventional commercial development and push up land prices for logistics and business-park users on routes like the Midland Highway corridor near Marong.

Meanwhile, the office fitout cycle has stalled. Businesses that would typically refresh tenancies on a seven-to-ten year cycle are sitting tight. Haymes Paint, headquartered in Bendigo, and other large local employers have reportedly retained existing office configurations rather than committing to new premises or refurbishments, a pattern replicated across the city's private sector. Construction costs remain elevated, commercial fit-outs that cost $800 per square metre in 2020 are now running at $1,400 to $1,600, making speculative builds financially unviable without pre-committed tenants.

For landlords and agents, the practical path forward runs through incentives rather than price cuts. Rent-free periods of three to six months are now standard in competitive Bendigo CBD lease negotiations, something that would have been unusual five years ago. Flexible short-term licences of 12 months or less are attracting small professional services firms that refuse to commit longer. Property owners who convert underperforming upper-floor office space to short-stay accommodation or serviced offices, formats that La Trobe University's Bendigo campus precinct has explored on Bendigo's northern fringe, appear better placed than those holding out for traditional multi-year corporate tenancies. The commercial property market here has not collapsed, but it is being renegotiated, term by term and floor by floor.