Office Sector Set to Surge Ahead

Offices are enjoying strong demand
Australia-wide, Office vacancies are falling.

And Melbourne leads the way at 5.5%; with Perth close behind, at 6.6% — due to the rebound in mining activity.

Offices set to SurgeAccording to the Property Council of Australia, these vacancy levels will reach 4.9% and 6.1% respectively, by January of next year.

With zero space coming onto the market in Melbourne, landlords will be well-placed to renegotiate far more attractive deals, as leases fall due for renewal.

Whereas, Brisbane’s current vacancy level of 9.2% is expected to blow out to 9.8% — making it very much a tenants’ market, as far as lease negotiations are concerned.

While rents are rising in most capital cities, selling yields are set to fall as well. This double benefit will be reflected in strong capital growth over the next four years.

Bottom Line: Shrewd investors are currently ranking their preferred Commercial sectors as follows …

  1. Office (both suburban and CBD)
  2. Industrial
  3. Retail

Now is the time for you to start re-balancing your portfolio — and ride the growth wave through to 2018.


Office Activity: CBD vs Suburban

Commercial Buildings
In several recent articles, we discussed the growing health of the CBD Office markets around Australia.

Melbourne still leads the other capital cities with a CBD vacancy rate of 6.2% at the end of March.

And according to Savills’ latest Office Spotlight, the number of whole floors within the city of Melbourne has fallen by some 35% — from 60 to 39 available floors, as at January 2011.

It seems that CBD tenants are scrambling to lock in larger areas, to allow for growth and avoid the expected huge rent increases over the next 5 to 7 years.

Office VacanciesAs a result, many mid-sized tenants are being pushed out into suburban locations. In turn, this is causing these vacancies to fall and rentals to rise.

As such, Melbourne’s suburban vacancy rate (at 5.8%) is now below that for the CBD.

And Colliers Research believes this could fall below 4% over the next 12 months — through a shortage of new space coming onto the market.

Likewise, Sydney and Brisbane have seen their suburban vacancy rates also decline. And net prime face rents in North Sydney are now up over $600 per sqm.

It would appear only Adelaide’s suburban Office leasing market has remained soft — despite several major sales putting some downward pressure on yields.

Bottom Line: Fundamentally, all the signs are there for continued growth in Commercial rentals and capital values over the next 5 to 7 years — despite the global backdrop creating hesitation for some investors, who are not part of the “Inner Circle”!


More Good News for
Industrial Property

Industrial Sector
The Industrial sector was probably the one most harshly affected by the global financial crisis.

Nobody wanted to expand — being prepared to operate in cramped premises, until a clear picture of economic growth emerged.

However, there has been a growing and now, strong tenant demand reported within the main east-coast cities. [Read more…]

Your Common Property Terms (A-C)


AS YOU can appreciate, I quite regularly get asked to explain what the various property terminology actually means.

Therefore, I thought it might be worthwhile to provide you with your own point of reference, over the next couple of weeks.

And I’ll do that by giving you various definitions starting with those items ranging from “A to C”.

That way, you will be able to quickly find the answer — whenever you are unsure about any property jargon being thrown around, by people who may be simply trying to show off.

What you’ll find here are practical definitions, intended for the every-day Investor.

A to C [Read more…]

Are Offices “The Go”?

Just take a look around your capital city CBD. And tell me, how many cranes to currently see on the skyline?

Sydney Skyline

Sydney Skyline

In most cities, you could count them on one hand — as there is minimal speculative development occurring right now.
[Read more…]

CBD Offices on the Move

Westpac has just released an Australia-wide outlook for Commercial property. And it predicts you will start to see growth in rents and values during 2010-11.

Two Cities

Two Cities

As employment numbers grow with the improved economy, demand for Office space will also take off again.
[Read more…]

State of the Commercial Market?

CBD Office Vacancies

CBD Office Vacancies


As you would expect, the financial turmoil worldwide has had a significant effect on most property markets. However, the effect has not been the same across the board.

The current state of the various CBD office markets is probably your best barometer of future activity for two reasons. First, the Property Council of Australia (PCA) conducts six-monthly surveys to establish the CBD vacancy rates right around Australia.
[Read more…]

Which Australian Office Markets are in Trouble?

Queensland seems to have been hardest hit. And in particular the Gold Coast, where vacancy levels have soared to around 18%.

But the difficulties confronting Queensland (and fellow mining State WA) are not necessarily reflected Australia-wide.
[Read more…]