National Office Market Shows Steady Improvement

LAST WEEK, the Property Council of Australia released its Office Space survey, for the 6 months to January 2012. And this will have some interesting implications for the Commercial property market.

National Vacancy Rates have fallen over the past 6 monthsAcross the 26 markets depicted in this chart … demand was up 20% up and supply 30% down, on the 20-year average for the six-monthly period.

As you can see, total vacancies fell from 9.0% to 7.9% — the lowest since January 2009. And perhaps a quick summary of the CBD Office markets would be worthwhile. [Read more…]

Commercial Property: What Makes for a Balanced Office Market?

EVERY capital city has both a CBD and suburban Office market. And as you can appreciate, keeping tabs on all the various suburban markets is almost an impossible task for most investors.

But generally speaking, the health (or otherwise) of the CBD Office markets within each capital city will provide you with a fairly good gauge of the overall Office scene around Australia.

Accordingly, this graph will provide you with a clear picture of what has occurred over the past 4 years.

As a rule of thumb, Office markets are said to the “in balance”, when their Vacancy Rate lies between 5% and 7%. [Read more…]

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.


Making Sense of
The Mining Boom

Size-wise, as a proportion of Australia’s economy … Manufacturing and Mining contribute more or less the same output.

 Services rival Mining on Investment However, Mining’s investment spend is currently more than three times that being spent by the Manufacturing sector.

All the media attention has mainly been focused upon this disparity. But that doesn’t really tell you the complete story — as you can see from the first of these graphs. [Read more…]

Melbourne Leads the Office Market

Savills International has just released a report on the current level of Office supply within the Melbourne CBD.

 Melbourne CBD Office Vacancies

Melbourne CBD Office Vacancies

Strong demand has seen the number of floors of Prime space within the CBD fall from 60 at the end of January this year, down to 42 at present — a decline of some 30%.

The amount of Secondary Office space has also fallen from 108 floors to 89, over the same period.

And underpinning all of this is the level of enquiry, which has jumped by 300% over the last six months.

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…]

The Office Market is Looking Good

While several capital cities still have a reasonably high Office vacancies, there is a general shortage of space looming.

Room to MoveTwelve months ago, it was all doom and gloom for the CBD Office markets in Perth and Brisbane — with falls expected in both rents and values. New projects were being finished, as the resources boom ground to a halt.

In Sydney … investment banks, lawyers and accountants were reducing staff in anticipation of a severe downturn in the finance sector.
[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…]

Looking into the Future for CBD Offices

An earlier post outlined my view on how the various CBD Office Markets would perform around Australia.

Future CBD Office Vacancies

Future CBD Office Vacancies


And a report by the ANZ Bank (in yesterday’s Financial Review) pretty much confirmed that previous advice.

Interestingly, their take on the level of vacancies is that it will not reach anything as bad as the 1990s.

But Perth, Brisbane and Sydney will be the most affected … and slowest to recover.