Rising demand and supply power Melbourne’s commercial growth
Melbourne’s office market remains vibrant despite the Melbourne CBD vacancy rate edging up slightly from 8.5 per cent to 9.1 per cent according to the Property Council of Australia’s Office Market Report released today.
Victorian Executive Director of the Property Council, Jennifer Cunich, said a large increase in supply additions coupled with continued positive demand was responsible for Melbourne’s minor vacancy rate increase.
“Melbourne has the third lowest vacancy rate amongst all of Australia’s CBDs,” says Ms Cunich.
“The future remains bright for commercial property in Melbourne.
“A total of 121,335sqm of new stock is due to enter the market in 2015. In 2016, a further 55,000sqm will come online with 442,557sqm mooted for the market.
“During the last six months, supply additions grew by 87,795sqm due to 18,311sqm of withdrawals and 37,922sqm of net absorption.
“The Spencer and Civic precincts’ vacancy rates decreased from 18 per cent to 12.5 per cent and 6.8 per cent to 5.6 per cent respectively as the two most improved locales in the Melbourne CBD over the past six months. This was largely due to 12,158sqm and 30,910sqm in net absorption respectively.
“The North Eastern and Civic precincts continue to have the lowest vacancy rates in Melbourne at 4.3 and 5.6 per cent respectively. There is no space in the pipeline for Southbank or St Kilda Road in 2015 or 2016.”
“Vacancy in the Western Core and Flagstaff precincts in the six months to July 2014 increased from 9.5 per cent to 11 per cent and 15.9 per cent to 16.3 per cent respectively, due to net absorption of -15,417sqm and -1,201sqm.
“Melbourne’s office market continues to enjoy positive demand reflecting ongoing confidence in the value of a CBD office location. In fact, the city is reporting the highest net absorption rate since July 2011.
“The property industry continues to play a vital role in the Victorian economy at a time when our State faces many complex challenges.
“To ensure Victoria continues to grow from strength to strength, the new State Government must work cooperatively with the City of Melbourne on sequencing Melbourne’s precinct expansion, accelerating development approval and easing the property tax burden.
The Property Council’s six-monthly Office Market Report has been the industry’s most respected independent office market research publication for more than 20 years.
For further comment:
|
Jennifer Cunich |
John Nguyen |
Attached: Further vacancy analysis
Key market indicators, Melbourne CBD (aggregate)
|
Grade |
Vacancy, Jan 15 (%) |
Vacancy, Jul 14 (%) |
Net absorption, 6 months to Jan 15 (sq m) |
Net absorption, 12 months to Jan 15 (sq m) |
|
A |
8.5 |
6.6 |
22,711 |
37,042 |
|
B |
12.5 |
13.9 |
12,711 |
13,453 |
|
C |
11.3 |
9.7 |
-8,004 |
737 |
|
D |
2.0 |
2.9 |
1,097 |
997 |
|
Total |
9.1 |
8.5 |
37,922 |
67,213 |
Key market indicators, Melbourne CBD (by locale)
|
|
Vacancy, Jan 15 (%) |
Vacancy, Jul 14 (%) |
Net absorption, 6 months to Jan 15 (sq m) |
Net absorption, 12 months to Jan 15 (sq m) |
|
Civic |
5.6 |
6.8 |
30,910 |
48,153 |
|
Docklands |
7.2 |
4.0 |
17,185 |
18,964 |
|
Eastern Core |
7.2 |
8.7 |
-2 |
6,074 |
|
Flagstaff |
16.3 |
15.9 |
-1,201 |
846 |
|
North Eastern |
4.3 |
2.7 |
-5,711 |
-6,262 |
|
Spencer |
12.5 |
18.0 |
12,158 |
16,178 |
|
Western Core |
11.0 |
9.5 |
-15,417 |
-16,740 |
More information available at www.propertyoz.com.au/officemarketreport