Suburban Offices Set to Surge

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Over the past few weeks, you have been reading articles about the various Office markets around Australia.

As such, you would now be aware of how each capital City compares, in relation to its … Vacancy rates … Rental levels … and expected Capital growth.

 You can expect definite Rental Growth in the city fringe.However, most of that commentary has been focused upon CBD Offices. And as a result, people have been enquiring about just how the Suburban Office markets are also likely to perform, over the next few years.

Clearly, a rent differential exists between the City and Suburban Office markets. And obviously, that rental gap will also vary, as you move around Australia.

Depending upon where each capital City is in its recovery phase, CBD rentals are expected to increase by somewhere between 12% and 24% over the next five years.

Therefore, you can appreciate there is a distinct advantage for many corporate tenants to relocate into the suburbs — if they have no compelling reason to remain located within the CBD.

Bottom Line: This tenant transition will in turn place considerable added pressure upon Suburban Office rentals — because of the already-low vacancy rates. Plus currently, there are no major projects presently under construction, within most inner-suburban areas around Australia.

Therefore, this is a perfect sector for the small to medium investor to cash in on … between now and 2018.

 

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