- Hub and spoke model potentially the saving grace for office workers.
- Non-CBD locations have shown great promise during the pandemic.
- CBD vacancy rates back on the rise.
Office vacancy rates took a big hit during the Covid-19 pandemic, CBDs looking bare throughout Australia.
The news is looking brighter this month, the Property Council of Australia’s Office Market Report for January 2021 showing the Australian CBD vacancy rate at 11.1%, back in 2018 when the market was much stronger, rates were 9.1% nationally.
Perth remains one of the most resilient markets, currently sitting at 20%, in 2018 19.4%.
Apart from Sydney and Melbourne, most other markets are within about 2% of their 2018 figures.
Confidence is in the air
Across the big markets in Sydney and Melbourne, optimism is strong.
State Director for Office Leasing in NSW at Savills Australia, Tom Mott, said in a statement:
“The leasing market in the early stages of 2021 has begun positively by way of vastly increased inspection volumes, proposal requests and leases in the final stages of being executed that were agreed during December 2020. A more robust assessment of this at the conclusion of the first quarter of 2021 will be interesting.”
Expectations are that the high vacancies rates will soon become a distant memory, Victorian Office Leasing director for Savills Australia said:
“We forecast the current high vacancy rates will peak. Tech sector, Professional Services, Government and flexible workspace providers will underpin demand. Transport issues will dissipate with the role out of vaccines. Workplaces will move back to normality before Q3 2021 with a focus on staff health, wellbeing, quality building services and lower densities.”
A boon for the ‘burbs
Parramatta, and East Melbourne all injected confidence into the commercial real estate sector.
In the Property Council of Australia’s Office Market Report, Parramatta vacancies were at 6.4% in January.
A hub and spoke model is what the Sydney Morning Herald is reporting as a potential way forward.
Decentralising is likely what the crystal ball is telling investors, Stockland was reported by SMH as proposing a $1.3B redevelopment in North Sydney, other REITs and investors like Centuria, Dexus, and GPT also investing heavily in non-CBD locations.
SMH also reported the “campus-style setting” with amenities like ample onsite parking and fewer floors to make stair use more reasonable are one of a few factors pushing the trend towards the suburbs.