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The Australian reported that Sydney and Melbourne’s commercial property markets are the most likely to deliver the strongest growth during 2020. Although sluggish economic growth has dampened rental increases, the market is improving (but at a slower rate than the residential market). Brisbane and Perth will begin to see strong returns similar to Sydney and Melbourne, but it will be over a longer term. (Office market and logistics to lead the way in a good year – Luke Dixon, 05/02/20) Read Citi’s predictions of the commercial market on Commercial Real Estate: Low bond yields fire up property prospects. This week the AFR featured office market analysis of major cities: Melbourne Melbourne’s CBD office vacancy rate has decreased to 3.2%, the tightest of all capital cities in Australia. However, this figure will rise with 400,000 sqm of new space coming to market in 2020. (Melbourne keeps crown of tightest office market – Michael Bleby, 06/02/20) Sydney Sydney has recorded the greatest negative demand for office space in Australia, as tenants move away from the CBD. The Property Council of Australia explained; “The government’s decentralisation agenda has also shifted a number of large-scale tenancies to Parramatta and recent office consolidation in the private sector has resulted in close to 100,000 sqm coming off the market pending refurbishment.” (Sydney CBD’s tight market forces tenants elsewhere – Ingrid Fuary-Wager, 06/02/20) Brisbane Brisbane is yet to experience improvements to its rates, with vacancy at 12.7% at the beginning of January. This is the likely result of greater demand for high-quality space failing to offset new supply of lower quality buildings. (New supply trumps stronger demand in Brisbane – Michael Bleby, 06/02/20) Adelaide Adelaide’s CBD saw an addition of 30,000sqm of office space at the end of January. Whilst this increased the vacancy rate to 14%, JLL said that net absorption trends were “heading the right way”. (Space industry a longer term plus in Adelaide – Simon Evans, 06/02/20) Perth Perth CBD’s office vacancy rate has eased to 17.6% in the last six months, falling from June’s 18.5%. Despite being the highest CBD vacancy rate in the country, it is the third consecutive year that Perth has fallen and the city is “trending in the right direction”. (‘Fewer crazy deals’ as Perth office vacancy rate falls – Larry Schlesinger, 06/02/20) Canberra Australia’s capital has fallen to a 10.3% vacancy rate in January, compared to 11.1% in June. Although the leasing market improved at the back end of 2019, it remains above the 30-year average rate of 7.5%. (Stronger tenant demand reduces Canberra vacancy rate – Larry Schlesinger, 06/02/20) Hobart Hobart’s office markets were not explored in the AFR, not dissimilar to its omittance from the map created during the 1982 Commonwealth Games opening ceremony in Brisbane.
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