A Clear Downshift in Spend and Space
The Minister for Finance has confirmed that the Commonwealth is reducing property expenditure by consolidating tenancies, embracing hybrid work and tightening energy costs.
Key outcomes include:
Occupational density improved to 13.1 m² (target: ≤14 m²), marking the second consecutive year of beating the benchmark and an improvement from 13.4 m² since 2023.
Cost per staff fell 2.9% (from $8,700 in 2023 to $8,448 in 2024), while total expenditure growth stayed at just 0.1%.
Energy expenses decreased by $9.4m, and cleaning & waste removal fell by $8m, reflecting better utilisation and footprint rationalisation.
This aligns with the Office Occupancy Report, which evidences a system‑wide efficiency shift.
53.9% of tenancies now meet the density target; work‑point vacancy is −1.7%, indicating mature shared desk ratios (commonly 8:10 work‑points to staff).
The controlled area fell to 2.93m m², while usable office area rose to 2.36m m²—signalling deliberate consolidation into better‑performing space.
The message for the market is clear: government isn’t exiting offices, it is becoming more selective about what it will occupy and fund.
Sustainability & Green Leases Are Now Core Leasing Requirements
While the footprint is contracting, expectations are rising, particularly around building performance and sustainability outcomes.
The Commonwealth’s transition towards Net Zero in Government Operations is shifting sustainability from “desirable” to contractual and measurable. Leasing decisions are increasingly shaped by:
- Green Lease Schedules becoming standardised requirements in new and renewed leasing arrangements
- NABERS performance expectations and greater scrutiny of energy efficiency
- Infrastructure readiness for electrification
- Improved controls and modern energy management systems’
- Stronger emphasis on data transparency, including reporting capability across the lease lifecycle
This matters because government leasing is not only about rent, it’s about the full cost and performance of occupation over time. Buildings and suppliers that can demonstrate sustainability outcomes will be better positioned, as agencies rationalise into fewer, higher-performing assets.
Procurement Rules: A New Operating Playbook
From 17 November 2025, the Commonwealth Procurement Rules (CPRs) will raise thresholds and codify prioritisation, negotiation integrity and information‑sharing:
- Threshold increase: NCEs’ non‑construction procurement threshold rises to $125,000.
- Australian business first: For $10,000–$125,000 (non‑panel) and $10,000–$7.5m (construction), Australian (and NZ) businesses must be invited first.
- SME‑first on panels: Under $125,000 for MAS, People Panel and DTA arrangements, agencies must invite SMEs first.
- Negotiations declared upfront and conducted under clear guardrails.
- Information‑sharing across entities to support policy, procurement integrity and supplier performance insights.
- CCS & Clause Bank updates and Australian business declarations streamline compliance in approaches to market and contracts.
Bottom line for suppliers: expect more structured engagements, clearer documentation expectations, and a tilt toward local capability, with probity and performance front and centre.
What Clients Should Expect in 2026–2030
1) Demand will focus on premium, sustainable, hybrid‑ready buildings
Government agencies will concentrate in high‑performance assets with strong NABERS, flexible floorplates, robust security and data/reporting capability. The footprint will continue to contract as hybrid ratios stabilise and cross‑entity co‑locations expand.
2) Moderate rent growth in prime markets; softer secondary market
Agencies will become more selective, they will pay for quality, but secondary buildings without clear upgrade paths will see longer vacancies and sharper lease negotiations.
3) Sustainability becomes non‑negotiable and embedded in leasing documentation
Net Zero settings are moving from policy intent to commercial reality. Green Lease schedules, NABERS performance, sub‑metering, energy controls, emissions reporting and electrification readiness will increasingly influence lease outcomes, renewal decisions and landlord obligations.
4) Shorter, more agile lease terms
Agencies will prefer 5–7 year terms (vs. legacy 10–15) with expansion/contraction options, and modular fit‑out solutions to support workspace reconfiguration without wholesale moves. This reflects the hybrid utilisation profile and the drive for continual efficiency improvements.
5) Data‑rich contracts and ongoing verification
Procurements will place a premium on evidence, auditability and verification. Expect rising expectations for live occupancy analytics, energy dashboards, and stronger assurance frameworks across the lease lifecycle.
The Takeaway
The Commonwealth’s property strategy is data‑led, sustainability‑anchored and procurement‑disciplined. For the market, this translates to smaller overall demand, but stronger competition for premium assets and suppliers that can demonstrate measurable outcomes.
If your asset or service offering can prove energy performance, hybrid functionality, security readiness, Net Zero alignment and CPR compliant value for money, you will be well‑placed to partner with Australia’s largest and most resilient occupier through the next cycle.
Government demand is evolving. Quality, sustainability and data‑rich performance are now essential. If you’re preparing your agency or your asset for this environment talk to us about unlocking opportunities, identifying gaps and positioning yourself for success in the 2026–2030 cycle.