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vacancy rate

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. [Read more…]

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…]

Industrial Property Set to Surge

Industrial Vacancy Rates are fallingThe Queensland economy may be slow to recover from all its natural disasters. But it’s Industrial property sector has been quick out of the blocks.

The boom in Queensland gas now has Brisbane with the lowest vacancy rate for Industrial property.

Next comes Melbourne — with Sydney well back in 3rd place, according to a recent survey by Knight Frank.

And increasing demand will put further upwards pressure on rentals … thereby, encouraging more developers into the market. [Read more…]

Lack of Construction Underpins
Demand for Office Space

Available Full CBD Office Floors are quickly vanishingThe Commercial property market is driven mainly by supply and demand — especially Offices.

And therefore, with …

  • falling vacancies,
  • positive net absorption and
  • few new projects in the pipeline …

… this means a looming shortage of Office space around Australia — with rentals poised to rise sharply. [Read more…]

Retailing Isn’t Totally Dead …
It Has Simply Changed

The Winery by Gazebo an Crown Street, Surry HillsIn last week’s article, you read a general overview of the Retail sector … and some of the issues currently confronting traders.

Let’s now take a quick look at three of the capital cities. [Read more…]

Commercial Property Looking Forward

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Is there a Future for Offices?

The last couple of articles have talked about all the misplaced doom and the gloom.

Plus, you also covered the various reasons why Australia overall is well placed to flourish (and not just survive) the current global distress.

A recent report on the Australian Office scene (by Morgan Stanley property research) would only tend to confirm that view. Their only concern would be the Sydney market, due to its heavy exposure to the financial sector. [Read more…]

Commercial Property Fundamentals
Continue to Improve for Investors


The mid-year report from the Property Council of Australia (PCA) has confirmed a tightening of all major Office markets — except for Sydney and the Gold Coast.

As you can see from the graph, Sydney’s vacancy rate actually increased from 8.3% to 9.3% during the six months to July 2011.

For the remainder of Australia’s office markets, there was an overall improvement — as demand for space exceeded supply, and yields began to firm.

According to Peter Verwer (PCA’s chief executive): “This is a good result, especially now with a lot of uncertainty about Australia’s economic resilience … demand and absorption are well above the historical average, except for the orphan Sydney.”

From this second graph, you will also notice that the Melbourne Office market has been consistently outgrowing Sydney, since about July 2004.

Furthermore, because of Sydney’s heavy dependence upon the financial sector … this growth trend is unlikely to change any time soon.

Melbourne, on the other hand, has its Office demand spread across a wide number of sectors. And therefore, has been far less exposed to the recent global turmoil.

Bottom Line: Despite all the stock market gloom, the underlying fundamentals for Commercial property are strong — particularly in Melbourne.

And historically, it is in times like these when shrewd investors have laid the foundation for their extraordinary fortunes in Commercial property.

 

“Where You Live Should NOT
Dictate Where You Actually Invest!”

Always consider the emerging trendsWherever you live, you tend to believe (and will happily tell people) that it is undoubtedly the best place to live.

Really, it’s just human nature.

But when it comes to investing your hard-earned dollars into Commercial property … your decisions should be governed by something more than a warm and fuzzy feeling.

For the past four or five years, Victoria has led the nation in economic growth; and it is one of the few enjoying a net growth in migration from other states.

Employment Growth shows some interesting trendsFurthermore, the latest ABS figures now confirm Victoria’s continued growth and job creation — leading all-comers over the past 12 months.

And you’ll also notice most of the various service sectors are currently outstripping the mining sector, as far as employment numbers are concerned. [Read more…]

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”!


“It’s Now Official: Offices are the Go!”


Over the past month or so, I’ve been making certain predictions about the Office markets around Australia.

But in a recent survey, the Property Council of Australia (PCA) now makes all of that official: Office vacancy levels have fallen to 9.5% overall — down from 10% in mid-last year. And this has been driven by strong growth in the mining and financial sectors. [Read more…]