The latest Property Council of Australia Office Market Report reveals that office vacancy rates have remained fairly flat nationally.
The stagnant office vacancy figures – hovering around the 10.5 per cent mark – come in despite demand increasing as the economy re-establishes itself after the mining investment boom.
Property Council chief executive Ken Morrison spoke to Property Observer and discussed the changing office property market.
“The almost static national rate makes it look like it is all smooth sailing across the lake,” he said.
“This hides what is happening below the surface.”
“The economy is in transition, Sydney and Melbourne are reclaiming their historic claims as the economic engine rooms of the economy and in most cities we are witnessing strong increases in demand.”
“This demand is being sufficiently met by significant additions to office supply.”
According to Mr Morrison, demand for offices is strong in Melbourne and Sydney. Melbourne’s CBD recorded a vacancy rate of 7.7 per cent and along with Sydney, they have the lowest vacancy rates out of all the capital cities.
Simon Hunt from Colliers International spoke to Property Observer about the strong demand in Melbourne and Sydney.
“The latest figures from the Property Council of Australia highlight the two-tier nature of Australia’s office markets nationally as a new year swings into action,” he said.
“In 2016, tenant appetite for Australian office space will continue to diverge between the high demand cities of Sydney and Melbourne and the country’s remaining major cities.”
With Melbourne’s vacancy rate falling to that 7.7 per cent from this strong demand, the market is expected to remain tight with around 71,000sqm of new office supply expected to come into the market this year and none forecast for next year.