Commercial Property: The Suburban Office Market

The Suburban Office market is currently your best choiceRIGHT NOW, the Sydney suburban market is trending sideways. And that’s rather good news, because the general consensus was it was about to slump.

While its vacancy rate sits at 9.6%, there is little new space coming onto the market over the next couple of years.

Because of the recent general uncertainty, most of lettings the have come about through lease renewals — as businesses chose to stay put, rather than relocate.

The expectation is for a return to solid rental growth during 2012/13, as business confidence improves.

The Melbourne Market has a Lower Vacancy Rate

Although demand for space actually fell, so did the rate of new construction over the past year — which has kept Melbourne’s vacancy rate at 5.7%.

Once again, there is no new construction in the pipeline. And over the past 12 months, the market seems to have been dominated by owner-occupiers and private investors.

This trend is likely to continue as larger investment trusts selectively re-balance their portfolios, by divesting some of their suburban offices.

Bottom Line: Both the Sydney & Melbourne suburban Office markets appear to be at (or just leaving) the bottom of their cycles.

And with little new construction looming, now would be perfect timing to secure a well-let Office suite — ready to ride the strong upswing, during the next 4 or 5 years.


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