Demand for office space on the improve

Demand for office space on the improve
Demand for office space on the improve

An article in the weekend Financial Review 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".

Demand for office space on the improve

Source: Knight Frank/Australian Financial Review.

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.

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 oversupply of space, within the Sydney and Melbourne office markets.

 

Chris Lang

Chris Lang

Chris Lang is an advisor to commercial property investors, sell-out author and regular speaker on how to invest in commercial property.

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