Australian office markets around the country have experienced solid capital value growth over the past three years, with yield compression thus far the key driver of values, along with good tenant demand, rising face rents and stock withdrawals. The growth story of Australian office since the GFC has resonated with both local and offshore groups, and we now operate in a market where competition for capital deployment in office stock is as strong as it has ever been.
Coupled with the yield compression cycle now is solid rental growth, both face and effective, particularly in the core markets of Sydney and Melbourne. The growth in white collar employment, as well as the broadening of the office occupier base to include a greater proportion of the booming health and education sectors, has resulted in unprecedented occupier demand conditions in Sydney and Melbourne, and near record low vacancy rates in key CBD and metro markets.
Colliers International’s Capital Markets team is pleased to bring you the 2018 Australian Office Investment Outlook for 8 major markets.