Australia’s Office Middle Markets have proven to be resilient during the first half of 2022, particularly during the June quarter as headwinds threaten to disrupt a considerably busy six months. Strong investor demand for premium and A-grade assets, and assets with robust leasing covenants and stable income have been the main catalysts for an active first half of 2022 as the flight-to-quality thematic persists, and investors seek out inflation-hedging assets in defence of incremental increases in the cash rate to curb inflation.
We expect a persistent flight to quality thematic, new stock and scarce investment offerings will continue to attract solid pricing for Office Middle Market assets in key CBD locations during H2 2022, however we believe transaction volume will be impacted as investors selectively place capital as the cash rate increases and the possibility of stagflation will expand the pricing disparity between vendors and purchasers.
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