While much attention has focused on the modelling of office property markets, little emphasis has been given in distinguishing between permanent and temporary effects. This paper attempts to address this issue in the context of the rental adjustment mechanism and the demandemployment relationship for major Australian CBD office markets. It is shown that by allowing the natural vacancy rate and the work-space ratio to be endogenously determined, it offers richer model specifications that permit a partitioning between long-run and short-run influences. This is achieved by employing econometric techniques that examine the stochastic behaviour of time series data. It is found that while equilibrium relationships exist, (between the vacancy rate and rent, and demand and employment), cyclical macroeconomic variables are relevant determinants.