Can You Afford to Miss Out?

The other day, we took a look at Commercial property cycles, and where the various Australian CBD office markets might sit.

Currently, Melbourne seems to be “leading the pack”. But you might be interested to explore exactly why that is.

Some recent research by Jones Lang LaSalle indicates that Melbourne’s Office vacancy is likely to fall to around 5.4% by 2013.

Several pundits are suggesting it could be even lower.

h3. And the reason why?

Historically, Melbourne’s average consumption of CBD Office space is 98,000 sq metres each year.

However only 94,000 sq metres of space is scheduled to come onto the market, over the next two years. And that means there will be a shortfall of some 102,000 sq metres.

Furthermore, only a handful of the buildings (listed in the JLL chart) are able to offer multiple, contiguous floors.

As such, this will put rental pressure on larger corporate tenants, who will be unable to use the threat of moving to help them negotiate a better deal.

Other landlords throughout the CBD will also benefit from this. And you could see Melbourne CBD Office rentals double over the next five years.

Obviously, there will be a flow-on effect, out into the city-fringe Office market as well — where new construction is expected to be well down, over the next two years.

As such, the Melbourne Office scene is looking extremely bullish … right through to when we predict the current cycle will peak, around 2018.

And that’s the reason you should look to secure a strong position with Commercial property now.

Later in the week … we’ll take a quick look at what impact a “hung parliament” could have on your investment decisions, over the next few years. And there is certainly some opportunity for you to capture a strategic advantage.