The Melbourne office market growth will continue until 2024, with a 30-40% increase in prime rent, according to the latest BIS Oxford Economics forecast.

The forecast predicted Melbourne’s office vacancy rate to rise above 5% in 2020, with over 250,000 square metres of new office space entering the market. However, it would drop back to 4%, as take-up outpaces new supply in the next years.

“Apart from a brief spike, we’re looking at six years with a sub-5% vacancy rate,” said BIS Property Economist Maria Lee.

Lee said that the Melbourne CBD market should experience a 30-40% growth in rents over the next five years, with values rising about 25%.

The biggest office landlords and developers will welcome the Melbourne forecast, Lee said.

Mirvac’s 38-storey Olderfleet tower at 477 Collin Street will be finished by 2020. QUIC’s 80 Collins Street project, a recent Dexus acquisition, is also due to completion next year. Cbus Property’s Collins Arch, set to complete this year, will include about 49,000 square metres of office accommodation.

“We don’t expect Victoria to sustain its recent stellar pace of economic and employment growth over the next couple of years, but there’s another factor at play that will boost net absorption,” Lee said.

The pent-up demand that had been growing and would be released as new buildings come on stream over the next couple of years would increase net absorption, according to Lee.

The growth in Melbourne CBD also made its way to the suburbs, as estimated vacancy rates fell to 4.6%.