Demand is increasing for CBD office spaces. This signifies a reversal of the trend we saw emerge during the 2020 and 2021 Covid years where offices were left almost abandoned in many cities as businesses pivoted to work from home arrangements.
However, when looking at the numbers they appear to be suggesting otherwise.
Australia’s CBD vacancy rate in the six months to July was 12.0%, compared to 11.3% in the previous half-year, according to the Property Council of Australia (PCA).
The city-by-city figures were:
- Canberra 8.6% higher than pre-pandemic
- Sydney 10.1% higher
- Melbourne 12.9% higher
- Brisbane 14.0% lower
- Adelaide 14.2% lower
- Perth 15.8% higher
The PCA said tenant demand for CBD office space has been increasing – but that the amount of office space coming onto the market has been growing at an even faster rate, which has been pushing up the vacancy rate.
The supply of office space across Australia’s capital cities has been above the historical average in four of the last five half-yearly reporting periods.
New supply is forecast to remain above-average in the next reporting period, before falling to below-average levels in 2023 and 2024.
This is mainly because it takes many years for properties of this nature to be approved for construction, built, and then occupied.
For those of you who may own commercial property. If you are planning on selling your commercial property due to the rising demand of office spaces, as we’ve discussed in one of our previous blog articles, please ensure you get legal advice first.