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AN ARTICLE in the Weekend Financial Review (Page 39) opened with … “Macquarrie Group, a bellwether for the strength of the office leasing market, is expanding.”
And this clearly accords with a recent report released by BIS Shrapnel, which confirmed the Office recovery would be stronger in “service and trade exposed markets like Sydney and Melbourne, but weaker in the mining-based markets such as Perth and Brisbane.”
For Melbourne, you are now seeing strong demand in and around the City fringe — mainly within Southbank and the Docklands precinct.
Developers in these areas enjoying obvious cost advantages, which are then reflected in a lower rent profile for their prospective tenants.
And this is what led the likes of ANZ and NAB to relocate to Docklands, over a decade ago.
A growing number of major corporate tenants are progressively realising they no longer need be located within the heart of Australia’s CBDs.
Instead, they can pre-commit to prime-grade Offices at very competitive rentals — and have that accommodation designed and fitted out, to meet their specific needs.
And this demand appears to be flowing through to established suburban markets as well.
Bottom Line: With most of these new developments having significant pre-commitment from major tenants … this should curb the tendency for speculative development, over the next 3 to 5 years.
And this will help safeguard against an over-supply of space, within the Sydney and Melbourne Office markets.
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