The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Urban Leader Awards Logos RGB White
NOMINATIONS CLOSE SEPTEMBER 12 RECOGNISING THE INDIVIDUALS BEHIND THE PROJECTS
NOMINATIONS CLOSING SEPTEMBER 12 URBAN LEADER AWARDS
LEARN MOREDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
OtherStaff WriterTue 14 Nov 17

Melbourne Office Market a National Standout

melbourne-vacancy

Melbourne was Australia’s standout office market in the third quarter of 2017, outperforming Sydney’s prime grade market in all aspects.

In CBRE's latest market view, incentive declines accelerated across the southeast CBD office market -- driving effective rental growth during the quarter.

Melbourne recorded its ninth consecutive quarter of positive growth in real rents and recorded quarterly prime net effective rental growth of 6.7 per cent.

Despite the Australian CBD market experiencing easing enquiry levels and a decline in net absorption overall, Melbourne’s office leasing market has been largely supported by strong demand fundamentals.

This included the growth of white collar employment in the CBD by 3.2 per cent in the year to June 2017, and positive net absorption in the year to July 2017, totalling 128,400 square metres – the strongest result since 2008.

[Related reading: Variation in Development Activity to Undercut Office Market Conditions]Melbourne prime incentives fell notably by 180 basis points, and CBRE research associate Felice Spark said the sharp acceleration in the decline of incentives was a key indicator of tightening vacancy and a shift towards a landlord’s market.

“While the other major Australian markets have either remained stable or witnessed some nominal softening, both Sydney and Melbourne have demonstrated an increase in demand and a fall in vacancy which has been a predominant driver of effective rental growth," she said.

Although rent growth was expected to soften when Melbourne’s new development cycle kicks in, CBRE transaction director Andrew Tracey said net absorption and demand would remain strong through to 2021.

“On top of that, Melbourne is for the first time in a generation facing a shortage of quality development sites and following the next round of buildings the market will get very tight," he said.

[Related reading: Melbourne Apartment Market Demand Overshadowed by 2017 Supply]Across the country, Brisbane saw a 1.2 per cent rise in prime net face rents to $628 per square metre, driven by new supply and strengthening occupier demand, while Perth's office market posted the first period of declining vacancy rates since 2012, easing from the 22.2 per cent peak to 21.1 per cent, with premium vacancy declining 16 per cent to 11.7 per cent.

Adelaide's prime grade office incentives were at 36 per cent while secondary grade space incentives held steady at 39 per cent in Q3, while soft occupier demand drove incentive growth by 325bps for prime and 420bps for secondary.

The Canberra office market saw prime net effective rents grow 12.1 per cent over the past 12 months, while prime vacancy also fell to 9.4 per cent. Due to a lack of new supply and the Federal Government’s plans to increase headcount, prime vacancy was forecasted to tighten over the next five years and will be a catalyst for further prime net effective rental growth of 5.5 per cent per annum between 2017-2022.

OtherOfficeAustraliaMelbourneFinanceMarketingReal EstateSector
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
4 Min
Woolloongabba Precinct Vulture St
Exclusive

Brisbane Developer in Cross River Rail Compensation Tussle

Clare Burnett
4 Min
The Mondrian Gold Coast hotel's food and beverage is driving profits
Exclusive

Touch, Taste, Theatre: What’s Driving Mondrian’s Success

Renee McKeown
6 Min
Fortis’ display suites are designed as brand environments first, with tactile details and curated design to build buyer confidence before project specifics.
Exclusive

Relevant or Redundant: Will Tech Kill Display Suites?

Vanessa Croll
7 Min
Exclusive

Missing Heart: Why The Gold Coast Needs a CBD

Phil Bartsch
7 Min
View All >
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
First projects named in a statewide plan to fast-track supply, including thousands of homes in a major growth region…
LATEST
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
3 Min
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
4 Min
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
2 Min
South Melbourne social housing precinct
Affordable & Social Housing

South Melbourne Housing Precinct Revamp Takes Next Step

Leon Della Bosca
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/tight-vacancy-rental-growth-makes-melbourne-office-market-national-standout