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Sydney and Melbourne lead office market recovery

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If recent figures released by global real estate firm JLL are anything to go by, the office sector improved significantly in the second quarter of 2015.

According to the company's research, 205,000 square metres of space has been absorbed this year - at least 43 per cent of this is made up of from up from figures from the last quarter. In addition to this, this is the fourth consecutive time that the country has experienced such positive results.     

JLL's Head of Strategic Research, Australia Andrew Ballantyne attributes it to a number of factors.

"Domestic lead indicators for the office sector improved over 2Q15. Corporate Australia has responded positively to the Federal Budget and more accommodative monetary policy," he explained. 

Mr Ballantyne also added that Sydney and Melbourne in particular are leading the way when it comes to office market recovery all across the country. 

In Sydney, the CBD has a net absorption of 137,600 square metres this year, comprising of 59,900 square metres that were sold in the last three months. These are the most impressive results that the city has achieved since the 2005 - 2006 financial year. 

 In addition to this, the national vacancy rate dropped to 7.8 per cent in the second quarter significantly lower than the 20 year average of 8.3 per cent. 

JLL's Head of Office Leasing, Australia, Tim O'Connor said this was a positive sign.

"Tenant demand for good quality and well-presented A Grade space was firm in the Sydney CBD over the 2014/15 financial year. As a result, strong activity in the A Grade sector has significantly reduced the number of contiguous options within existing buildings," he elaborated.

This comes at a time when property development feasibility is in an excellent position for Sydney CBD properties, with the vacancy rates tightening from 11.9 per cent to 5.6 per cent over the current financial year. 

Date Published: 03 Aug 2015
Category: General News

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