How are office markets doing across the Eastern seaboard?

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As rents continue to rise, Sydney’s suburban market will become more and more attractive.

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Sydney is the pace-setter of the three office markets, benefiting from a strong local economy and significant infrastructure.

Urbis’ report revealed 135 options of 1000m+ available in the CBD and 55 in Suburban markets. The highest availability is among A grade buildings, which accounts for 51% of contiguous options.

Director Lester Alvis believes we’ll see increased demand in suburban markets in the coming months: “The results in Sydney were no surprise and we expect to see the vacancy rate fall even further. As rents continue to rise, Sydney’s suburban market will become more and more attractive.”

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Melbourne has a great deal of supply slated for the next few years - it will be interesting to see how the market absorbs the new space and deals with the backfill.

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Melbourne has seen an increase in contiguous options across all major precincts over the last year.

The Premium and A Grade market held steady with an increase of 3% and decrease of 1% respectively. However, its secondary market is feeling the pressure, accounting for 137, or 46%, of available options. This up 59% on last year. 

Urbis’ study showed performance in the Docklands is up. Director Ben Koops explains, “Despite strong supply, the Docklands performed well over the last six months, offering high quality space at competitive rental prices compared to the traditional CBD grid.

“Melbourne has a great deal of supply slated for the next few years and it will be interesting to see how the market absorbs the new space and deals with the backfill,” added Koops.

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Brisbane is seeing a trend of ‘flight to quality’, with tenants taking advantage of the competitive rental rates and incentives to upgrade their office accommodation.

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In Brisbane there is significant availability of contiguous options across most precincts and grades. 73% (153) of these are in the CBD and 27% (57) in the Fringe. However, like Melbourne, many of these options are classified as secondary grade.

Director Fraser Bentley explains, “Brisbane is seeing a trend of ‘flight to quality’, with tenants taking advantage of the competitive rental rates and incentives to upgrade their office accommodation. Further, the study reveals that there are only two options ready to occupy greater than 10,000sqm within the CBD and this could be impetus for additional development, especially for those major tenants considering their options of greater scale.

“With the rent differential falling between CBD and the fringe, the pendulum is swinging in the CBD’s favour. Brisbane CBD’s supply outlook is modest, so we expect the total vacancy rate to fall over the next few years.”