Australian office markets to weather global storm as demand rises and vacancies fall

February 02, 2012 | Office | Research | Commercial

Despite uncertainty surrounding conditions in the European and US economies, circumstances in Australia's key office markets are not as dire as they were during the global financial crisis, according to Simon Hunt, Colliers International Managing Director, Office Leasing.

"While there are plenty of ‘doom and gloom’ forecasts being made for our market this year, we don't see the situation as being as bleak as it is being painted,” Mr Hunt said.

"On the whole, 2011 proved to be a very active year in the office leasing market.

"Our office leasing teams across the country executed more than 723 deals last year – this is the highest number of deals we have ever recorded.

"The year also ended with strong enquiry figures. Nationally, we recorded an increase of 10 per cent on the number of enquiries received in 2010 and 21 per cent on total area.”

"We haven’t seen any major tenant deals we’ve been working on fall over. Additionally, of our top 30 deals in 2011, 21 were Australian companies, representing 40 per cent of our revenue.”

Mr Hunt said the national office market was being largely driven by Australian-based companies, particularly those affiliated with the resources sector, and both mining and non-mining states were reaping the rewards.

According to office market data released today by the Property Council of Australia, vacancy rates have dropped in all capital cities across the nation, with the exception of Sydney.

“Going forward in 2012, tenant demand in Brisbane and Perth is assured given strong mining employment growth,” Mr Hunt said.

“Other markets will also continue to benefit due to flow-on impacts to the domestic economy. These impacts are expected to be most apparent in Melbourne and Adelaide, markets which are most strongly influenced by growth within the resources sector.

“Canberra is a two-tier market, with a continuing dominant focus from the government sector. Strong net absorption and the adaptive reuse of some stock, which will take redundant stock off the market, will pave the way for a steady performance in the year ahead.

“Weakness in Sydney net absorption is consistent with this market’s high exposure to global financial conditions.

“Expected redundancies in the financial sector have been well publicised, however, once these flow through, we see the outlook for Sydney as positive.

“So, generally speaking, the latest results for the national office market are very promising.

“Once economic issues are resolved overseas, we expect things to improve, and that will probably be around the latter half of 2012.”

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