City Office Markets Starting To Reclaim Their Pre-GFC Values

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Office Values heading back to pre-GFC LevelsIT HAS TAKEN almost 4 years … but 2012 should see the prime Office markets in Perth, Melbourne and Adelaide expunge the capital value lost through the GFC — according to CBRE research.

In turn, this will impact upon their suburban Office markets as well.

But it might take until 2016 before Sydney, Brisbane and Canberra are able to recoup that same lost ground.

And the Reasons for that?

The Perth market has enjoyed a very strong bounce from the resources sector, with very little new construction over the past 3 or 4 years.

Melbourne entered the post-GFC downturn with probably the best local economy. And it did not have the same concentration of finance sector tenants, that Sydney did. Thereby, experiencing the shallowest dip in capital value.

Throughout the downturn, Adelaide seemed rather protected from any GFC fallout — keeping a stable balance between demand and supply.

Unfortunately, the Sydney market had the greatest exposure to the finance sector — which has kept its vacancy rate disturbingly high, despite only modest new construction levels.

Canberra already had a significantly high vacancy rate when the GFC hit. And the government cutbacks will certainly not help to improve that situation.

While Brisbane also has its own mining sector, that has not created sufficient demand to reduce the high vacancy rate, following the GFC downturn. And clearly, the devastating and continued flooding has adversely affected the local economy as well.

Bottom Line: Fortunately, the past 4 years has seen only a modest amount of new construction. And this will help to keep vacancy rates across Australia hovering around the long-term averages, for most capital cities.

As a Commercial property investor, you should be viewing the Perth recovery as too rapid. And the Brisbane recovery as too slow. It’s neither wise to invest into volatility, nor stagnation.

Both the Adelaide and Canberra markets are relatively small; an affected more by local issues.

Therefore, with some guidance, you should be focusing upon the Melbourne and Sydney markets going forward.

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