A practical guide for commercial tenants, CFOs, HR leaders and property teams choosing or upgrading a Melbourne workplace.

The attractive tenancy, and the expensive question nobody asked

Imagine a 90-person professional-services firm preparing to leave an office that no longer suits the way its people work. The lease expiry is approaching. Tuesday and Wednesday are crowded; Friday feels empty. Video calls spill into corridors. The board wants less space, better client rooms and greater certainty over occupancy costs.

Then the property team finds it: A well-located Melbourne CBD floor with good natural light, an impressive address and a lease incentive that makes the numbers look compelling. The inspection is positive. The rent fits the model. The move date still appears achievable.

The executive team is ready to advance the deal when one question changes the conversation:

A test fit reveals that the tenancy can hold the required desks, but not the mix of confidential rooms, video-call settings and client spaces the business actually needs. The existing mechanical zones do not align with the proposed rooms. Fire and electrical alterations will require coordination with the building. The project program has allowed for construction, but not enough time for design decisions, landlord review, permits, long-lead procurement, commissioning, technology installation and the staff move.

The tenancy is not necessarily wrong. But the decision is no longer simply about rent. It is about the total cost and deliverability of turning property into a functioning workplace.

This scenario is illustrative, but the decision pattern is familiar: Organisations compare properties before translating the workplace brief into a buildable plan. By the time the unknowns surface, negotiating leverage has reduced and the move date has become immovable.

Melbourne’s office market offers choice, but choice is not certainty

Melbourne organisations are making workplace decisions in a market where vacancy remains elevated and occupiers continue to favour better-quality, flexible workplaces that support hybrid work. Recent market reporting also shows that the direction of vacancy can vary depending on the reporting period and new supply: the common signal is not that every building is equivalent, but that quality, flexibility and tenant experience matter more in a competitive leasing market.

That creates opportunity. Tenants may be able to compare multiple buildings, negotiate incentives or move into a better workplace. Owners of older or vacant floors can reposition space to compete. Yet a generous incentive cannot correct every floorplate, service or approval constraint. Nor can a polished reception compensate for a workplace that fails on peak days, acoustics, technology or operational flow.

The smarter question is not, “Is this a good deal?”

The five decisions to make before committing capital

1. Define how the business needs to work—not just how many desks it needs

Headcount is a weak design brief. A 90-person business does not automatically need 90 identical workpoints, and a smaller footprint does not automatically produce a better hybrid workplace. The useful inputs are behavioural: When people attend, which teams overlap, how much confidential work occurs, how often clients visit, how meetings include remote participants, and where concentration or collaboration currently breaks down.

Start by documenting:

• Current and forecast headcount by team

• Peak-day attendance rather than weekly averages

• Individual focus, confidential work and video-call demand

• Meeting patterns by size and duration

• Client, visitor and front-of-house requirements

• Storage, records, samples and specialist equipment

• Accessibility, inclusion, sensory and wellbeing requirements

• Future growth, contraction and reconfiguration scenarios

Good work design considers the work itself, workers’ needs, the physical environment and the systems through which work is performed. That makes workplace planning a business and risk decision, not simply a furniture exercise.

The output should be a workplace brief precise enough to test against more than one property and flexible enough to compare competing scenarios.

2. Test the floorplate before the lease hardens

A pre-lease test fit translates the brief into an early spatial proposition. It should show more than desk capacity. It should test circulation, meeting-room mix, support spaces, arrival experience, accessibility, adjacency, natural light, acoustic conflicts and the relationship between enclosed rooms and building services.

At minimum, compare three options:

A test fit is not a final design and should not be presented as one. Its value is speed: it makes the hidden trade-offs visible while the organisation can still change the property, brief, lease position or capital strategy.

3. Inspect the building behind the finishes

A tenancy can look presentable and still carry significant fit-out exposure. Enclosed rooms may require changes to air distribution, sprinklers, detection, emergency lighting or electrical services. Older finishes may conceal floor preparation, hazardous materials or documentation gaps. Building management may mandate contractors, protection measures, delivery procedures or after-hours activities.

The feasibility review should identify which items can be understood from available information, which need consultant advice, and which remain assumptions pending investigation. Typical review areas include:

• Mechanical capacity, zoning and controls

• Electrical supply, distribution and backup requirements

• Fire services, egress and essential-services interfaces

• Accessibility and circulation

• Hydraulic services and kitchen locations

• Structural loading or penetrations

• Existing-condition and hazardous-material information

• Landlord design criteria and building rules

• Loading dock, lift, waste and noisy-work restrictions

• Planning, heritage or signage considerations where relevant

This is where a low initial allowance can become misleading. The goal is not to predict every concealed condition. It is to expose the known constraints, document assumptions and place an appropriate contingency around what cannot yet be confirmed.

4. Establish the approval pathway and ownership of risk

In Victoria, the Building Act 1993, Building Regulations 2018 and Plumbing Regulations 2018 give legal effect to relevant National Construction Code requirements. The appointed building surveyor is responsible for issuing the building permit and assessing the proposed design against applicable Victorian requirements and the NCC.

The right pathway is project-specific. Depending on the building and scope, the delivery team may need input from a building surveyor and relevant design, access, fire, services, structural, heritage or planning specialists. The content and procurement process should therefore avoid vague promises that a project is 'fully compliant' before the design, site and approval route have been properly assessed.

A credible feasibility output should state:

• The anticipated approval pathway

• The consultants likely to be required

• Information still needed from the landlord or building manager

• Design elements that could trigger added review or redesign

• Who owns each submission, decision and approval

• Time allowances and dependencies that must appear in the program

For heritage property, the City of Melbourne Heritage Design Guide assists interpretation of heritage policies but must be read with the Melbourne Planning Scheme; the response will depend on the site and applicable controls.

5. Build a project-wide cost and decision-led program

A construction price is not the same as a fully funded move. A decision-grade budget should separate the categories clearly enough for the CFO and project team to understand what is included, what is provisional and what sits outside the builder’s contract.

Current industry guidance indicates that Australia remains a relatively high-cost fit-out market. Cushman & Wakefield’s 2026 guide reports an average Melbourne office fit-out benchmark of AUD 2,535 per square metre, but a benchmark is not a quote: Actual cost depends on project scope, quality, building condition, services, logistics, timing and what the stated rate includes.

The program should also be built around decisions, not construction alone. Show the date by which the brief must be approved, the test fit selected, design frozen, landlord comments resolved, permits obtained and long-lead items released. Then connect those dates to practical completion, commissioning, IT installation, furniture, defects and staff occupation.

What a useful pre-lease feasibility study should deliver

A feasibility study should reduce the most important uncertainty quickly enough to influence the property decision. It is not a substitute for detailed design, consultant certification or a final tender. It is a structured decision tool.

A strong deliverable might include:

• Workplace brief summary and key assumptions

• One or more preliminary test fits

• Capacity and space-allocation summary

• Initial building-services and approval observations

• Landlord and building-management questions

• Preliminary project-wide budget range

• Program from current decision point to occupation

• Risk and opportunity register

• Recommendation: proceed, proceed subject to conditions, redesign the brief, or compare another property

For a tenant, this improves lease and capital certainty. For a property manager or owner, the same discipline can test whether a warm shell, targeted refresh, speculative suite or floor subdivision is most likely to improve leasing appeal without unnecessary overcapitalization.

Three warning signs that deserve a pause

“The incentive will cover the fit-out.”

Perhaps, but only after the full project cost and timing of the incentive are understood. Test whether it covers design, services, furniture, technology, relocation, make-good and contingency, and examine how the lease documents treat payment or reimbursement.

“The existing fit-out looks reusable.”

Reuse can be commercially and environmentally valuable, but it must be tested against the new brief, condition, code and approval implications, services alignment and remaining life. Reuse is a strategy, not an assumption.

“Construction only takes twelve weeks.”

A construction duration may exclude briefing, design, landlord review, permit processes, procurement, commissioning, furniture, technology and move activities. Protect the occupation date by starting with the entire decision-to-operation pathway.

The board-ready conclusion

A Melbourne office decision should not be reduced to rent per square metre or a fit-out rate pulled from a generic guide. The property, workplace brief, base-building condition, approval pathway, total project cost and move program are interdependent. Change one, and the others can move with it.

The right early work does not remove every unknown. It does something more practical: it makes the remaining uncertainty visible, allocates it and allows the business to decide whether the opportunity still makes sense.

Before signing the lease or approving the capital request, ask for evidence that the proposed workplace can be planned, approved, funded and occupied on the required terms. That is the point where design begins to create commercial value, before a wall is built.