CBD Offices Give Direction For Commercial Property

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CBD-Office-Markets

THE PROPERTY COUNCIL of Australia recently released its latest survey — for the six months to January 2013.

It reports that the national Vacancy Rate for CBD offices has increased slightly to 10.4%. However, that hardly tells the whole story.

An Uneven Spread

Office-vacanciesAs the accompanying table reveals, the vacancy levels show a marked variation around Australia.

Demand for space in Brisbane and Perth has declined in line with the mining sector.

Yet despite this, new supply is scheduled to come onto the market — with the current total office stock due to increase by more than 10%, over the next 4 years.

Likewise, Adelaide will also experience an oversupply through to at least 2016.

Not All Bad News

Both Sydney and Melbourne have seen a number of older office buildings converted into upmarket residential apartments. However, the Barangaroo Project will soon push Sydney’s prime CBD vacancies above 10%.

Overall, demand for Melbourne has remained strong — causing its vacancy rate to fall to around 8.7%.

Bottom Line: The CBD office markets are not interest-rate sensitive. Instead, they respond purely to their local supply and demand for space.

At this stage, Melbourne would appear to be best positioned of all the CBD markets to grow in value over the next 3 to 5 years — which is now being evidenced by the strong interest from overseas purchasers.

And you would expect that to flow through to the suburban office market as well.

Chris Lang

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