In case you have not read, the Property Council of Australia (PCA) has released its mid-2018 ‘Office Market Report’ at the beginning of the month. Now, as the information has had time to circulate and make its way into most business’ inboxes, we would like to discuss it further and simply summarise it for you.
The nation’s main CBD markets have now recorded a decline in office vacancy rate and throughout the first half of this year, the Melbourne and Sydney CBDs have exhibited their strength, as vacancy rates in both have fallen to their lowest levels in over ten years.
Let’s begin with Melbourne. The Melbourne CBD essentially experienced a slight reduction in vacancy rates due to tenants moving to better-quality and larger office environments and spaces. According to Savills Australia’s director for Office Leasing in Melbourne, Mark Rasmussen, this vacancy rate is the lowest it has been since July 2008, but there hasn’t actually been movement in the past six months, which reflects the current development and demand cycle.
New South Wales
Next, we have Sydney. Since the Global Financial Crisis in 2008, Sydney’s CBD office vacancy rates are at an all-time low, after slowly declining for the past eight quarters. Alongside this, Sydney has been seeing the steady increase of co-working hubs as a result of reduced available space.
Australian Capital Territory
Unlike any other office market in Australia, Canberra has had a stable rental growth. This is a result of the strong government sector presence as other markets are subjected to economic cycles. Savills Australia data shows that net face rents for the city’s A-grade assets grew by 2.8% in twelve months, while B-grade assets grew 8.5%.
Within Adelaide’s CBD, their vacancy rates seem to be a steady pattern as the trend of flight-to-quality continues to offset the movement from non-competitive spaces to price-grade spaces. Although the market was seeing lower levels of take up, a high percentage of Adelaide’s demand for office space was for prime-grade space.
In Perth’s CBD, the office leasing market is not expecting to see any increases in the vacancy rate medium term. The market is no longer gaining the higher volume of new supply income, compared to the years 2015 and 2016. The flight-to-quality trend is also a driver in Perth’s market, as is recentralisation in the CBD.
Lastly, Brisbane. Last December, Brisbane CBD saw a minor spike in the office vacancy rates. However, they have since dropped after solid leasing activity in the first half of 2018. Large firms in the finance and insurance sectors are being seen to recentralise into the CBD.
This short summation of the ‘Market Office Report’ is just a snapshot of the relevant information. The office vacancy rates are a numerical calculation of all office space available to rent in the given market. This low in the office vacancy rates across Australia is evident in the lack of spaces to rent, making the strategy of co-working spaces and the buying market more suitable to most business’.
The information outlined in the ‘Office Market Report’ is essential to all current and potential commercial property owners as it affects the location and quality of the workplace environment.
As the vacancy rates are at a current low, it may be more difficult from some to find a location to suit the project’s vision and fit within the budget, however, PEAKE Project Consultants are experts in the field and provide expert guidance and services to give you a successful project in these market conditions.