Office spaces in prestigious Melbourne buildings are being filled up.

According to Richard Jenkins, net absorption of premium-grade space was 51,082 square metres in July. The national research director for the largest home valuation and commercial property valuer group, Herron Todd White, placed the figure as the highest since January 1994.

Jenkins said, “Incentives crept up and tenants scurried to take advantage of the available quality space.” In January, the vacancy rate for premium space was at its highest of 10.6 percent. Vacancies dropped to 5.9 percent in July.

Jenkins also noted that in July the Melbourne central business district office market had 4,061,380 square meters of net lettable office space. In the six months to July, 74,453 square meters were added to the market and most are in Docklands.

The research director estimated 12 projects with 236,600 square meters of space to be available for the lease market over the next three years.

One of the major projects under construction is the 39,800 square meters in Bourke Street, specifically, for Channel Nine, BP, and Telstra. Australand's refurbishment of 30,000 square meters in 357 Collins Street is underway, and so is the 30,800 square meter construction at 321 Exhibition Street for lease to Origin Energy.

Melbourne Water will also be a tenant of a 12,500 square meter space at 990 La Trobe Street. Site works started for the Australian Taxation Office's new building at 735 Collins Street and the National Australia Bank's new office at 720 Bourke Street. All three sites are due in 2013.

Sixty four percent of new and refurbished supply under construction was pre-leased.