What’s Happening With Offices Around Australia?

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Melbourne-Sydney

AS A COMMERCIAL PROPERTY investor it’s important for you to keep tabs all the separate markets around Australia.

To help with that, a recent market update by Credit Suisse places in Sydney and Melbourne CBD Offices as the best performers over the next three years.

However, Brisbane and Perth are expected to deteriorate further from where they are at present.

The report anticipates a 3.5% per annum improvement in the effective rental for both Sydney and Melbourne — with vacancy rates to remain under 10% for the next three years.

And this is supported by improved tenant demand over the past 12 months.

Whereas, rentals for Brisbane and Perth are expected to fall by 1.2% and 7.2% respectively over the same period.

And their vacancy rates are likely to blow out to 22% and 19% respectively.

Unfortunately, demand for space in both these mining States has been rather weak; and the Office markets continue to suffer from an oversupply of new space.

Ripple Effect

Historically, you find the surrounding suburban areas tend to follow closely what occurs within the various CBD Office markets.

That means, any increase (or decrease) in demand for space tends to create a “ripple effect” out into the suburbs — with a time-lag of a around six months.

Bottom Line: For the foreseeable future Sydney and Melbourne are expected to have strong tenant and buyer demand for Office property. In turn, this should provide investors with solid predictable income and capital growth over the next 3 to 4 years.

Chris Lang

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