Permanent office withdrawals reshape our CBDs
Permanent withdrawals of office stock across major east coast CBD and fringe markets of Sydney, Melbourne and Brisbane will accelerate in 2015, according to Knight Frank’s latest research.
The research report, Permanent Office Stock Withdrawals: Development Market Insight, forecasts 513,610 sqm of office stock permanently withdrawn between 2015 and 2018.
A further 296,292 sqm of potential withdrawal has also been identified.
According to Knight Frank’s head of research for Australia, Matt Whitby, the major driver for the change of use of office stock has been the upswing in residential investment demand.
Forty seven per cent of the stock withdrawn across CBD and fringe markets in all three cities is for a change of use to residential, with a further 26 per cent slated for a likely residential or hotel development. A further seven per cent is for pure hotel proposals.
Whitby says withdrawals will cross a mix of markets, with conversion of office buildings accounting for 32 per cent of withdrawals.
“The remaining 68 per cent are to be demolished for redevelopment. Residential and hotel developments are the dominant uses, at 80 per cent,” Whitby explains.
In Brisbane, the majority of the CBD stock withdrawal is expected to occur over the next 18 months, and is predominantly tied to the demolition of older Queensland Government-owned buildings to create the Queens Wharf development site (pictured). The successful bidder, Destination Brisbane, a consortium made up of Echo Entertainment Group, Far East Consortium and Chow Tai Fook Enterprises, was announced last week.
In Sydney, a large proportion of the withdrawn stock located in the Midtown portion of the Sydney CBD, which is expected to consolidate the migration of the major office core towards the north.
Knight Frank says levels of office withdrawal in Melbourne are not as pronounced as in Brisbane or Sydney, with a strong cycle of withdrawals and conversions during the Postcode 3000 planning incentive scheme in the 1990s moving Melbourne further along in its cycle.
Read the Permanent Office Stock Withdrawals: Development Market Insight report.
And keep an eye out next Thursday for the release of the Property Council’s latest Office Market Report.