Melbourne’s stubbornly high commercial vacancy rates may hold an unlikely answer to Australia’s housing shortage, if governments and property owners are willing to act.
With Melbourne recording one of the highest property vacancy rates in the country, and growing concern that state and federal housing targets are unlikely to be met, attention is turning to an underutilised resource sitting in plain sight: ageing, second-grade office buildings scattered across the city’s inner suburbs and CBD fringe.
Dr Usha Iyer-Raniga, Professor of Sustainable Built Environment at RMIT University, says adaptive reuse (the conversion of existing buildings to new purposes) represents a meaningful, if partial, path forward.
“Adaptive reuse of vacant office buildings may partially solve the housing crisis,” she said.
“These buildings offer a great opportunity as they are often accessible and situated close to amenities.”
The economic case for conversion is compelling from a property owner’s perspective, too.
Buildings left vacant do not simply sit idle; they actively lose value.
“Leaving the buildings as they are not only reduces rental income for the owners; it also reduces their asset value over time,” Dr Iyer-Raniga said.
“Unoccupied buildings may attract unwanted social attention, further degrading the value of the property and its immediate surrounds.”
The concept is no longer purely theoretical.
A recent conversion at 602 Little Bourke Street in Melbourne’s CBD has shown what is possible when stakeholders commit to the process.
“A recent example of adaptive reuse is Make Room at 602 Little Bourke Street, where the building was converted into safe, supportive transitional housing for people — showing how collaboration can support pathways to permanent housing,” Dr Iyer-Raniga said.
The Make Room project, which provides transitional accommodation for people experiencing or at risk of homelessness, has drawn attention as a model for how disused commercial stock can be redirected toward urgent social needs.
Dr Iyer-Raniga cautions that adaptive reuse is not a blanket solution.
The physical characteristics of office buildings (floor plate dimensions, natural light access, ventilation, and structural configuration) vary widely, and not all lend themselves to residential conversion.
“While not all buildings are appropriate for housing, some of these may be used for student accommodation, medical clinics, aged care or childcare facilities,” she said.
This flexibility broadens the potential pool of buildings that could be repurposed to meet a range of community needs beyond residential housing alone.
Realising the opportunity at scale will require more than market forces.
Dr Iyer-Raniga stresses that thorough feasibility work and targeted public investment are essential prerequisites.
“Depending on the location and amenities needed, a detailed study will need to take place to determine opportunities for adaptive reuse, along with government funding to support these initiatives,” she said.
As housing affordability remains a pressing political issue and construction costs continue to weigh on new development, the idea of working with existing building stock (rather than building from scratch) is gaining traction among planners, developers, and community housing providers alike.
Dr Iyer-Raniga will be speaking on sustainable building practices as co-convenor of the World Sustainable Built Environment Conference, to be held 10–12 June 2026.
