The Questionnaire CBD commercial office market will be the prominent player in ’08. A growth in procurment activity is likely to take place with businesses re-examining selecting purchasing as the costs of borrowing depletion the bottom line. Strong tenant demand underpins a new round of construction with several new assuming buildings now likely to proceed Email Extractor.
The vacancy rate is likely to fall before new stock can comes onto the market. Strong demand and a lack of available options, the Questionnaire CBD market may just be a key beneficiary and the standout player in ’08.
Strong demand coming from business growth and expansion has fueled demand, however it has been the decline in stock which has largely driven the tightening in vacancy. Total office inventory declined by almost twenty-two, 000m² in Jan to Summer of 2007, that represent the biggest decline in stock levels for over 5 years CBT Email Extractor
Ongoing solid white-collar employment growth and healthy company profits have sustained demand for property in the Questionnaire CBD over the second half of 2007, resulting in positive net ingestion. Driven by this tenant demand and dwindling available space, rental growth has accelerated. The Questionnaire CBD prime core net face rent increased by 11. 6% in the second half of 2007, reaching $715 psm yearly. Pay outs offered by landlords continue to decrease.
The whole CBD office market absorbed 152, 983 sqm of property during the 12 months to June 2007. Demand for A-grade property was particularly strong with the A-grade off market diffusing 102, 472 sqm. The premium office market demand has decreased significantly with a negative ingestion of 575 sqm. In comparison, a year ago the premium office market was diffusing 109, 107 sqm.
With negative net ingestion and rising vacancy levels, the Questionnaire market was struggling for five years between the years 2001 and late 2005, when things began to change, however vacancy stayed at at a fairly high 9. 4% till June 2006. Due to competition from Brisbane, and to an inferior extent Melbourne, it has been a real struggle for the Questionnaire market in recent years, but its core strength is now showing the real outcome with most likely finest and most peacefully based performance indicators since early on in 2001.
The Questionnaire office market currently recorded the third highest vacancy rate of 5. 6 % in comparison to all the major capital city office markets. The highest increase in vacancy rates recorded for total property across Australia was for Adelaide CBD with a slight increase of 1. 6 % from 6. 6 %. Adelaide also recorded the highest vacancy rate across all major capital cities of 8. 2 %.
The city which recorded the lowest vacancy rate was the Perth commercial market with 0. 7 % vacancy rate. In terms of sub-lease vacancy, Brisbane and Perth were one of the better performing CBDs with a sub-lease vacancy rate at only 0. 0 %. The vacancy rate could additionally fall further in ’08 as the limited offices to be delivered over the following two years come from major office refurbishments that much had been committed to.
Where the market is going to get really interesting is at the end of this year. If we assume the 80, 000 pillow metres of new and renovated stick re-entering the market is absorbed this year, coupled with the minute amount of stick additions entering the market in ’09, vacancy rates and compensation levels will really plummet.
The Questionnaire CBD office market has brought off within the last few 12 months with a big drop in vacancy rates to an all time low of 3. 7%. It has been accompanied by rental growth of up to 20% and a marked decline in pay outs over the matching period.
Strong demand coming from business growth and expansion has fuelled this trend (unemployment has decreased to 4% its lowest level since 12 , 1974). However it has been the decline in stock which has largely driven the tightening in vacancy with limited space entering the market next two years.
Any assessment of future market conditions should not ignore some of the potential storm atmosphere beingshown to people there. If the US sub-prime crisis causes a liquidity problem in Australia, corporates and consumers alike will find debt more expensive and harder to get.
The Reserve Bank is continuing to lift rates so as to quell inflation which has in turn caused an increase in the Australian dollar and oil and food prices continue to climb. A combination of all of those factors could serve to dampen the market in the future.
However, strong demand for Australian everything has helped the Australian market to keep relatively un-troubled to date. The outlook for the Questionnaire CBD office market remains positive. With supply expected to be moderate over the next few years, vacancy is determined to keep low for the nesting two years before increasing slightly.